In a precursor to the Union Budget for 2022-23, the Finance Ministry has sought suggestions related to taxation from industry and trade associations. The suggestions have been asked on direct taxes and indirect taxes — excluding goods and services tax (GST), decisions for which are taken in the GST Council.
In a communication to trade and industry associations coming in the aftermath of the impact of the Covid-19 pandemic, the ministry has invited suggestions for changes in the duty structure, rates, and broadening of tax base on both direct and indirect taxes giving economic justification for the same. Suggestions have to be sent to the ministry by November 15, 2021, it said. “Your suggestions and views may be supplemented and justified by relevant statistical information about production, prices, revenue implication of the changes suggested and any other information to support your proposal,” the ministry said.
The request for correction of inverted duty structure, if any for a commodity, should necessarily be supported by value addition at each stage of manufacturing of the commodity, it said. It would not be feasible to examine suggestions that are either not clearly explained or which are not supported by adequate justification or statistics, the ministry added.
The Budget 2022-23 is likely to be presented in Parliament on February 1 next year. It will be the fourth Budget of the Modi 2.0 government and Finance Minister Nirmala Sitharaman.
The Ministry also sought suggestions on reducing compliances, providing tax certainty, and reducing litigations. It clarified that GST matters are not examined as part of the Budget, as they are to be decided by the GST Council. Recommendations related to the Central Excise and Customs duty could be given, it said.
As can be seen that the government policy with reference to direct taxes in the medium term is to phase out tax incentives, deduction and exemptions while simultaneously rationalising the rates of tax, the ministry’s letter said. Currently, more than 100 exemptions and deductions of different nature are provided in the Income-Tax Act.