‘Buoyant revenues to help Centre pay States entire GST compensation this year’
The government has not levied any extra taxes to manage the COVID-19 crisis, Finance and Corporate Affairs Minister Nirmala Sitharaman asserted on Thursday, adding that revenues were now so buoyant that the Centre was confident of paying States their entire GST compensation dues this year.
“I want to highlight this point, even if I didn’t intend to say it I will say it nevertheless: COVID [crisis management] has not been financed by taxation,” the minister told industrialists at CII’s national conclave. “Individual tax assessees have not been asked for one additional paisa… nor has industry been taxed. We have not asked one extra paisa from anybody for us to manage the coronavirus pandemic,” Ms. Sitharaman added.
While there was no direct reference in her speech to fuel taxes and cesses, Ms. Sitharaman said India would be “paying through our nose for fossil fuels” if the country was unable to become self-reliant in energy through a greater push for renewables.
Stressing that inflation had only crossed the upper tolerance threshold of 6% occasionally due to seasonal factors, the minister indicated India’s economic recovery had not yet reached a level where liquidity support measures could be rolled back as was 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.
The minister said the focus on plugging tax loopholes had bolstered 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… 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.”
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