Rest of Asia

We will look to widen tax base, take action on avoidance, Indian FM says

James Jose, Suneeti Ahuja Kohli/London
Filed on July 1, 2021

Greater technology to be deployed to widen the tax base, Nirmala Sitharaman says during India Global Forum.

Nirmala Sitharaman, India’s Minister of Finance & Corporate Affairs, has said that she will be putting a major emphasis on technology to widen the tax base and take action on tax avoidance, in order to make India’s finances more resilient for any future crisis, be it health or otherwise.

“This is where I rely on technology as one of the biggest tools that I have. And luckily, India has got it in its hands. I have to deploy it much better to widen the tax base, to plug the loopholes, which we started doing in GST, and it is showing results,” Sitharaman said at the India Global Forum on Thursday.

“In India, one of the bigger things is that we have to be a lot smarter in the ways in which evasion can be contained. Tax avoidance will have to be carefully studied and action has to be taken without obviously making it difficult for those honest taxpayers. So, the tax base has to be widened, greater technology has to be deployed and also make a clear attempt to formalise the economy. There is still a large underbelly, if I may say so, which is yet to be formalised into the mainstream of the economy. We will have to get them on board and make compliance tax assessments on EC, otherwise small businesses, many of whom are still outside of it, will never be encouraged to join the system. That is one work which I will be focusing on,” she added.

Asked on how prepared the finance ministry is to deal with a possible third wave, she said:

“No one wishes for a third wave, but we have given a lot of attention to the medical infrastructure. Two days ago, we announced different measures to improve the medical infrastructure in Tier 2 Tier 3 cities and not just the eight metro cities. So, the ramping up of medical infrastructure, looking at different segments of the population, looking at children, and so on, is happening at good speed. So, God forbid, if there is a third wave, we are medical infrastructure-wise, well prepared. We also have the vaccination campaign which is going on throughout the country. So, the way in which we are moving towards greater coverage in vaccination, I hope we will be able to keep most of the vulnerable population from the attack of the virus.

“On the other hand, as regards money for spending, we have really ramped it up in this budget. But more importantly, even notwithstanding the pandemic, we have had eight consecutive months of GST revenues, which is the indirect tax revenues, keeping up pace and we have collected more than 100,000 crore rupees per month. Eight continuous months, we have kept that figure and I hope that will be sustainable. Now, there is no national lockdown, economic activity is happening, and it is picking pace. So, revenue generation will give us a bit more leeway to be able to keep some resources for meeting up with a challenge,” added Sitharaman.

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