New Delhi, May 5
Finance Minister Yashwant Sinha today indicated that the government was contemplating setting up of a economic law commission to review tax laws and other economic legislation in the context of the new economic reforms programme.
Addressing the silver jubilee function of the Income Tax Settlement Commission, Mr Sinha said the proposed commission would look into the tax laws and the extent to which these should be amended. The Finance Ministry would discuss the issue with the Law Ministry shortly to work out the modalities.
He indicated that the new Income Tax Act would be finalised by March 2002.
The proposed changes in the economic laws were necessary as all over the world countries, which had liberalised their economies, have brought their tax laws in tune with the changing situation.
“It is necessary to look at the entire gamut of Income Tax laws,” he said, adding that government would come up with a new tax-assessee friendly Income Tax Act taking into account all the necessary amendments required for the future. “We will try to come out with the new act by March 2002,” he said.
“The fact remains that the income tax law has been a patch-work of amendments. We are carefully looking at a tax law afresh,” he said referring to the proposed IT act.
Mr Sinha pointed out that in a country of 100 crore people, only 2.3 crore of them paid taxes. There was a need to increase this narrow base.
He felt that exemptions given on income tax was one reason for the tax base remaining narrow. He stressed the need for a fresh look at the
requirement of tax exemptions now that the tax rates in the country were moderate.
Referring to the role of the Income Tax Settlement Commission, Mr Sinha said it would always have an important role to play as they not only take action against defaulters but also help get revenue from them.
Expressing concern over the "mind-boggling" tax arrears of about Rs 50,000 crore, he said “they are perhaps non-realisable. But we need to review it and look at these in a comprehensive manner.”
Later speaking on the sidelines of the conference, the Minister admitted that revenue shortfall during 2000-01 might increase the Centre’s fiscal deficit, pegged at 5.1 per cent of the GDP.
“There might be some impact on the fiscal deficit as a result of the tax shortfall. Obviously, there would be a review of the budget estimates,” he added.
Though Mr Sinha did not conform reports that there was a shortfall of Rs 10,000 crore in tax collection last financial year, he said there were some reasons for the shortfall. The government would soon come up with the figures, he added.
Earlier, Mr Sinha had said the shortfall in revenue would be offset by savings on plan and non-plan expenditures, so that the impact on fiscal deficit was marginal.
