Tax Reforms Would Be Incomplete Without The Reform Of Direct Tax Legislation
Q.The contribution of direct taxes in the total tax collection in 2016-17 fell below 50 percent to 49.66 percent for the first time since 2006-07. This is despite a 15 percent growth witnessed in the direct tax collection during the year. Why is this so?
Kapil Nayyar: You would have to see it from a macro perspective. The direct tax collection contribution has increased in absolute terms however it has reduced in proportion to the indirect tax contribution. This is primarily due to the increase in indirect tax contribution. In the year 2016-2017, service tax rate increased to 15 percent from 12.36 percent and also the excise duty on petrol and diesel increased multiple times.
Q: In January though, it was reported the direct tax collections jumped by 18.2 percent during the first nine months of current fiscal at Rs 6.56 lakh crore. What led to this jump?
Kapil Nayyar: Demonetisation can be one of the major contributors to such increase. The return filing base has increased which has led not only to the increase in direct tax collection but also the collection of advance tax.
Interview of Kapil Nayyar published on CFO-India February 13, 2018