New Delhi: India's overall tax buoyancy is still short of expectations, 15th Finance Commission Chairman N.K. Singh said on Monday, adding that reforms in both direct and indirect taxes are incomplete.
Calling India's tax reforms incomplete, Singh said that there was a need to bring in the simplified direct tax code and remove the bottlenecks in the goods and services tax regime.
The task force to draft the new direct tax law had submitted its report to Finance Minister Nirmala Sitharaman in August and is believed to have recommended a slew of measures to simplify the income tax regime.
With India's growth slowing and the recent cut in corporate tax rates causing an estimated revenue loss of 1.45 trln rupees, revenue collections for the current fiscal so far has been subdued. The government's direct tax collections in Apr-Sep grew merely 1.16% on year to about 4.6 trln rupees.
India's GDP growth slumped to a 25-quarter low of 5.0% in Apr-Jun and many economists see growth falling further in Jul-Sep.
"We need to see healthy, robust tax buoyancy for which the finance ministry has announced major initiatives including changes in the goods and services tax...the medium term impact of the fundamental changes in rates of corporate taxes in the long run will make India an important and more competitive investment destination," Singh told reporter at the sidelines of an event.
On whether the finance ministry will reduce the Budget target for direct tax collections in view of poor buoyancy in the mop-up, member of Central Board of Direct Taxes Akhilesh Ranjan said that the ministry is currently reviewing the entire impact of lower growth and the move to slash corporate income tax rates on collections.