Global downturn wipes off 2.5 pc tax revenue from GDP: Shome

Chennai:

The tax revenues of the government was hit during the global economic slowdown and the nation suffered nearly 2.5 per cent loss of tax revenue in the gross domestic product, according to advisor to Union Finance Minister Parthasarathi Shome on Thursday.

Delivering a lecture at an event organized by the Association of Chartered Accountants, Chennai, Shome said as the GDP grew at eight per cent, the tax to GDP ratio grew by 25 per cent. The collection reflected huge saving in corporate sector as a result many policies were taken including slashing of customs rate.

But now with the growth of the economy declining, the revenue deficit has widened with the nation suffering 2.5 per cent loss of revenue in GDP, he added.

He also defended the surcharge on corporates and said the measure was to protect the small taxpayers from the financial drag.

He also said that data mining is being intensified and centers have been set up at Bangalore and Vaishali. He said the modernization of income tax department has also started. However, he rued that India that there is no accountability over recovery of taxes unlike the Western economies.

He also said that there are some structural defects in Goods and service tax and there were issues between state and the center.On the direct tax code, he said it is now being examined by the opposition MP Yashwant Sinha and likely to be discussed during the budget session.

Shome also hailed Chennai’s Large tax Unit. “I was impressed by the LTU here which could be a model for other states. Cities that were not successful are now trying to catch up with the Chennai model,” he added.