India Inc, the service sector including the Government and the Corporate sector, has got a hint regarding tax rebate from the Finance Ministry. It has been hinted by the FM that India Inc would be offered a tax rebate once the GST collection attains stability in the Country. On the other side, the target for GST collection has been lowered from Rs 13.71 lakh crore to Rs 11.47 lakh crore for 2018-19.
Broadly talking, it would take some time for the Corporate sector to get the benefit of the relaxation in the corporate tax. It would be after the GST revenue collection of indirect taxes attains stability. The Government in collaboration with the Finance Ministry is making continuous efforts for attaining stability in indirect tax collections via Goods and Services Tax (GST).
The Income tax rates for companies would be lowered once the Government attains the decided margin and stability in this area.
“The finance minister has promised that as the revenue collection, as in the GST goes up, he will rationalise the tax rate for the rest of the sector over the next few years,” Sandip Somany, the President of Federation of Indian Chambers of Commerce and Industry (Ficci), an industry body, said after meeting Arun Jaitley.
A meeting was held between the trade body and FM for the presentation of the Agenda for the next Government.
“We had fruitful discussions across a wide range of subjects including taxation, job creation and other things that we should be doing as a country to increase industrial output. We also discussed various social schemes to help less affluent people which can be done as GST collections increase,” he told reporters.
Looking back we remember that the Modi Government while the union budget 2015-16 had talked regarding the reduction of the Corporate tax from 30 percent to 25 percent and had consoled to be enacted in the coming years. But as of now, no action has been taken on this and as per the Government, this sector would be offered with tax rebate once the Indirect tax collection through GST stabilizes.
Following the Agenda of 2016-17, the tax rates for MSMEs have been reduced to 25 percent for the businesses which have a turnover less than Rs 50 crore. The very same has been continued for the FY 2018-19 with an increase in the turnover limit to Rs 250 Crore. The alteration in the tax slab has profited a majority of the Companies and the data which says that only 7,000 companies are in the 30 percent tax slab category out of 7 lakh companies which file GST returns in totality, which surprises as it covers the majority.
Initially, the Government had set a target of over Rs 1 trillion GST collection per month in order to achieve more than Rs 13 trillion indirect tax margin collected annually. Later, the target has been revised and has been lowered to Rs 11.47 lakh crore from Rs 13.71 lakh crore budgeted initially for 2018-19. For the FY 2019-20, the budgeted target has been kept at Rs 13.71 lakh crore.
However, the Government has been successful in attaining the collection target of Rs 1 trillion but only for a short time duration viz, April and October (2018) and January (2019).
The GST department experienced a higher revenue collection in the month of April as during this month Businesses generally pays arrears for some of the previous months and the total collection in October was Rs 1 lakh crore because it is a festive season.
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The GST collection for February is lower as compared to January and it ended Rs 97,247 crore in Feb. The Government was able to collect Rs 9.71 lakh crore as revenue from GST.
To achieve the set target of GST collection is quite crucial as it has a direct effect on the fiscal deficit which is the biggest factor in creating a difference in the government’s revenue and expenditure.
