The government has not levied any extra taxes to manage the COVID-19 crisis, Finance and Corporate Affairs Minister Nirmala Sitharaman claimed on Thursday, adding that revenues are now so buoyant that the Centre is confident of paying States their entire GST compensation dues this year.
Speaking at CII’s national conclave, the minister said: “I want to highlight this point even if I didn’t intend to say it. I will say it nevertheless. COVID has not been financed by taxation. Individual tax assesses have not been asked for one additional paisa to manage the Corona, nor has industry been taxed. We have not asked one extra paisa from anybody for us to manage the Corona pandemic.”
While there was no direct reference in her speech to fuel taxes and cesses, she said India will be ‘paying through our nose for fossil fuels’ if the country is unable to become self-reliant in the energy sector through a greater push for renewable energy.
Stressing that inflation had only crossed the upper tolerance threshold of 6% occasionally due to seasonal factors, Ms Sitharaman indicated India’s economic recovery has not reached a level where liquidity support measures can be rolled back yet as is happening in some other countries.
“I am glad that the RBI has that understanding that too quick (a) sucking out of liquidity from the economy may not give the necessary stimulus that is required,” she said.
Citing the Prime Minister’s focus on ironing out income tax and GST issues, the minister said plugging loopholes has helped bolster revenues so much that ‘we are sure that this year, the GST compensation will be paid to all the States in time so that they have money in their hands to undertake all the developmental activity they need to take’.
Referring to criticism about direct tax collections being lesser than indirect taxes, putting a greater tax burden on the ordinary man, Ms Sitharaman said: “That’s not true. Now, gradually income tax is also improving. And with the disinvestment focus, I expect the fiscal situation to improve substantially so that we won’t have problems to address issues where money is required.”
