The finance ministry is likely to introduce a slew of measures in the budget to prepare the ground for the proposed goods and services tax that is yet to be approved by the states. The indirect tax reforms are expected to withdraw some fiscal stimulus measures, raise excise on diesel cars and cigarettes and switch over to a negative service tax list. This would help the government align taxes with a unified GST, the country's most comprehensive indirect tax reform, and also raise additional revenue. "The idea would be continue with what was initiated in the last budget... a full-fleged GST would be the culmination of the reform process, but that would take time," said afinance ministry official. The finance ministry may opt for a gradual increase in excise rates because of the current slowdown even though policymakers say that the fiscal stimulus should be fully withdrawn. After the 2008 financial crisis, the government had cut excise duty from 14% to 8% and service tax was brought down to 10% from 12%.
Source: Economic Times
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