New Delhi, Feb 27 (Calcutta Tube) Having set April 1, 2011 as the deadline to introduce the new direct tax code, Finance Minister Pranab Mukherjee Saturday hoped to synchronise it with a pan-India goods and services tax.
‘The goods and services tax has taken some more time since there are more actors — not only me but 28 state governments also,’ the finance minister said during an interaction with Indian industry, a day after presenting the budget for 2010-11.
‘But we have built up a good rapport with the entire committee of state finance ministers. We are trying to create an atmosphere where divergence of opinions have reduced and convergence of opinions is expanding,’ he said.
‘Through that process, I do believe it is possible to arrive at a consensus which will help us to introduce the goods and services tax also. If we synchronise these, to my mind this will be the greatest tax reform in contemporary period.’
The goods and services tax will create a common domestic market and replace the current fragmented regime at the federal and state levels like service tax, excise duty, value added tax, cesses, surcharges and local levies.
During the meeting, Mukherjee did not make any commitment on the requests made on the tax proposals, but Finance Secretary Ashok Chawla said the suggestions had been noted and would be given due consideration.
In another interaction earlier, the finance minister assured industry that the fiscal stimuli to pump prime the Indian economy will be withdrawn fully only when there is robust and sustained recovery.
‘I am committed to fiscal consolidation in the interests of the economy’s capacity to sustain growth in the medium and long term,’ he told the annual meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI).
‘This can be achieved through a robust recovery in private investment and consumption demand,’ he said, urging captains of Indian industry assembled here ‘to respond to the challenge’.
Mukherjee also said that the country needed to look at its export strategy afresh, so that the recovery in November 2009, after 13 successive months of decline, can be sustained in the long term.
‘There are some concerns over the extent to which the export recovery that was seen in November and December can be sustained. There is uncertain recovery in the developed economies,’ said the minister.
‘We need to take a re-look at our strategy. We should diversify our export markets to recover some of the growth momentum.’
The finance minister, however, drew comfort from the fact that the fundamentals of the Indian economy remained strong and the positive aspects of the recent performance far outweighed the negatives.
‘We need to pursue the factors underpinning the recent spurt in growth to quickly regain the momentum that slipped in the past year,’ he said, adding: ‘One can hope to see the economy breaking the double-digit growth barrier in the very near future.’
During the interaction, outgoing chamber president Harsh Pati Singhania appreciated the relief on personal tax in the budget but said the increase in minimum alternate tax on the corporate sector to 18 percent from 15 percent had left the industry disappointed.