NEW DELHI: The Finance Ministry is unlikely to concede too many tax sops in the budget making exercise slated to begin from the middle of this month as the government battles a huge shortfall in revenues. Among the few beneficiaries of tax sops would be the critically affected sectors and sectors such as green energy and start-ups which the government wants to encourage.
“The government will be very cautious about giving tax sops in the forthcoming budget as we would like to keep fiscal deficit under a tight leash. This current year has been an exceptional one and we had to
increase the borrowing to record levels to combat the pandemic … but that cannot continue for ever,” said top revenue department officials.
Officials added that they were aware various industry forums were seeking tax sops, but the government itself was finding it hard to collect revenue in a year when the economy was contracting, it would concentrate on helping “critically affected sector” such as textiles, and areas which the state wanted to promote such as green energy. “We have to protect our revenue collections,” they pointed out.
The government had in May raised its borrowing target from a budget Rs 7.8 lakh crore to Rs 12 lakh crore to meet increased expenses from stimulus and healthcare programs and to take into account the reality of lower tax collections. Many analysts believe that the government which is planning another round of stimulus for the economy, may actually end the year with a bigger borrowing figure to fund an ever widening deficit.
Net direct tax collections during April- August this year was Rs 1.92 lakh crore or 31 per cent less than the same period last year, while net indirect tax collections during the five month period was down by
11 per cent at Rs 3.42 lakh crore. However, GST collections which were steadily declining has gone up in September to touch Rs 95,480 crore.