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Modi govt says it’s within its rights to make tax announcements in interim budget

If govt thinks there's a pressing issue, it's perfectly legitimate to make tax announcements in interim budget, says economic affairs secretary Subhash Garg.

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New Delhi: Amid criticism that the central government tinkered with direct taxes for the first time in an interim budget, the Modi government has said that legally and constitutionally there were no restrictions on it not to make announcements on income tax.

In the interim budget announced on 1 February, then finance minister Piyush Goyal announced a full tax rebate for all tax assessees with income of up to Rs 5 lakh annually. Additionally, he also increased the standard deduction for salaried people from Rs 40,000 to Rs 50,000.

“Legally, constitutionally it can be definitely done, conventionally it has not been done most of the time but there’s no bar,” Subhash Chandra Garg, secretary, economic affairs, finance ministry, told ThePrint.

“If the government thinks that this is pressing issue and the middle class needs support and therefore doing it, it’s perfectly legitimate and constitutional,” said Garg.

However, he added that people with income of up to Rs 5 lakh will have to continue filing their returns.

“This doesn’t affect the tax base, these people remain very much part of the tax net. What’s affected is the tax you get, it affects tax receipts,” Garg said, adding that the hit to government revenues will be around Rs 16,000 to Rs 17,000 crore “which is manageable”.

He also said that the lower income group deserved some rebate and support and that was outlined in the budget.

Also read: Income Tax refunds being held back so that stiff collection targets are met, allege CAs

New programmes

Garg said that since it was an interim budget, the Modi government could announce only a few programmes aimed at a few particular segments.

“Since it was an interim budget, only a few pressing things were picked up. The farmers incomes scheme, the unorganised sector pension scheme and the middle class… That was the conscience choice as these three groups needed much assistance and support,” he said.

Garg added that these programmes can even help in boosting jobs.

The Modi government has been under severe criticism from the opposition for not being able to generate quality jobs.

The economic affairs secretary added that the government will resort to strategic disinvestment and buybacks to meet its disinvestment target of Rs 80,000 crore for this fiscal.

The government raised only Rs 34,142 crore till December.

“We will meet the target. The figure of Rs 34,142 crore is dated and there is no cause for any concern,” Garg said, adding that a lot can be achieved in the last two months.

“We have our plans in place and there is enough time to be able to meet the target.”

State of economy

Garg added that the country’s growth story continues to be strong driven by its domestic consumption even as there are some reports suggesting a global slowdown.

He pointed out that most global think tanks and multilateral agencies, including the World Bank, have predicted a growth rate of about 7.3 per cent to 7.5 per cent for India, while reducing the same for China.

Garg also sought to highlight that the rupee has stabilised after going through some volatility.

Also read: Central Board of Direct Taxes wants income tax department to step up collection efforts

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