RTTNews - Finance Minister Pranab Mukherjee said the global economy had started stabilizing, and early signs of revival of the Indian economy were visible, though a delayed monsoon cast a shadow over agricultural growth.
Addressing the 25th annual conference of Chief Commissisoners and Directors-General of Income-Tax on August 11 at New Delhi, he said that India, along with China, was being watched by the world as the engine for global economic recovery. Central revenues played a vital role in ensuring rapid economic development and inclusive growth by providing the much-needed resources. As direct taxes became the major source of central revenue, their role had, accordingly, increased in shaping the economic future of India, he added.
The Finance Minister emphasized that tax laws should be simple, stable and robust. Tax rates should remain moderate and the present multiplicity of taxes, tax-exemptions and deductions should be gradually phased out to improve tax-compliance.
He said that the government was taking a major leap forward in direct tax reforms by formulating a new Direct Taxes Code, to be put in the public domain tomorrow. He exhorted his audience to go through the draft and give their views and suggestions to enable the department to finalize the document for taking it to Parliament in the winter session.
Mukherjee said that direct tax collections grew at an average annual rate of 26.8% in the last five years, and more than trebled to Rs.3,38,212 crore in fiscal 2009 from Rs.1,05,088 crore in fiscal year 2004, thereby increasing its share to 6.21% from 3.81% of the Gross Domestic Product (GDP). This impressive growth was made possible by improvement in tax administration as well as better tax compliance, he added.
He said that for the current financial year, the direct tax collection target was fixed in the Budget Estimates at Rs.3,70,000 crore at a growth of 9.4% over the actual collection last year. Given the likely impact on government finances due to unanticipated drought, he suggested a further rise in the direct tax collection target to Rs.4,00,000 crore.
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