Moving toward lower tax rates with no exemptions: FM

KV Prasad
Tribune News Service
New Delhi, February 1

Finance Minister Nirmala Sitharaman said her government’s decision to remove 70 of 120 tax exemptions was a step towards moving to lower tax rates with no exemptions.

"Donations made to charitable institutions will no longer be exempt under the new tax regime, but can still be claimed under the old one," Sitharaman said. She was addressing a press conference after she presented the Union Budget for financial year 2020-21.  

The minister said additional capital will be provided to public sector banks “as and when required”.

The finance minister called the tax charter a major step toward ensuring that there is no harassment of taxpayers.

 “We are committed to respecting taxpayer in the process of nation building. Only three countries, USA, Canada and Australia, have such rights for taxpayers. The government is intent on not harassing taxpayers. We’ll enshrine in the statute as well,” Sitharaman said.

She said she expected the central government to meet its disinvestment target within six months.

She said revenue generation was improving.

“We hope that benefits derived from corporate rate tax cut will help boost collections. We also hope to bring down deficit to 3.5 per cent next fiscal from 3.8 per cent in the current fiscal,” she said.

Sitharaman said there were fewer beneficiaries than expected under the PMKisan scheme introduced last year, but the government expects more people to avail of the facility this financial year.

Revenue Secretary Ajay Bhushan Panday, who also addressed the press briefing, said that the exemptions were removed “in order to offer low tax rates to who don't want or use exemptions”.

He said of the Rs 2.10 lakh crore disinvestment target that the budget sets, Rs 90,000 crore is expected to come from the listing of LIC and IDBI.

He said an expression of interest (EoI) for sale of government stake in Bharat Petroleum Corp Ltd (BPCL) will be issued shortly.

The Cabinet had approved sale of government stake in BPCL in November last year. 

When asked about Sensex’s unenthusiastic reaction to the Budget, Finance Minister Sitharaman said the picture would be clearer only on Monday.

 “We will wait for a full working day—Monday. Many of what we said, especially for the bond market, should find reflection and there will be clear indication. Not sure if today was a full reflection,” she said.

With PTI