New Delhi : The Economic Survey has singled out two major items — Goods and Services Tax (GST), and the Direct Tax Code (DTC) — as the next major initiatives that can improve the ease of doing business and promote efficiency and productivity growth.
On the GST, it has said: ‘‘Uneven and high tax rates and uneven tax treatment of similar economic activities have induced distortions in the behavior of firms and households. Replacing all existing indirect taxes by the GST will create a national market, eliminate cascading taxes, and align taxation of imports and exports correctly. This will improve the competitiveness of produc-tion and export from India.”
Similarly on the DTC the survey points out, ‘‘The DTC is required as a clean modern replacement for the existing income tax law. The key objective must be simplification with a clean conceptual core, and the removal of a large number of special cesses and exemptions that favour special interest groups. The tax system must move away from industrial policy, with incentives for one activity or another, towards a simple framework. “
The emphasis on removal of special cesses and exemptions is one of the key to ‘susbidy reform” considering that the central government’s bill on account of subsidies is mounting not only for the poor but for the corporate sector as well in terms of ‘revenue foregone through tax concessions.”
Now will the finance minister bite the tax bullet…?