 | « Back to article | Print this article |
'The voice which came wherever I travelled was that we are proud taxpayers. We are honest taxpayers. We want to continue to serve the country by being good taxpayers.'
'But what do you think about the kind of things you can do for us?'
"The PM was very clear that he wants to do something. It is for the ministry to have the comfort level and then go with the proposal. So, more work that was needed was convincing the board about efficiency in collection and honest taxpayers' voices. All this was work here in the ministry, not so much for the PM," Finance Minister Nirmala Sitharaman tells PTI Editor in Chief Vijay Joshi. The first of a multi-part interview.
Thank you so much for talking to PTI. Congratulations on this, on this Budget. Firstly, because it's your eighth straight Budget, no other finance minister has done that.
And secondly, it has been received very well by the people. It has been called a people's Budget, almost a revolutionary Budget.
Nirmala Sitharaman: Thank you. Thanks for sharing your feedback.
I am just intrigued, like I said, it's a revolutionary Budget.
At no point in history has the tax burden reduced so much in one fell swoop.
What was going on in your minds...the policymakers? What was the inflection point where you said, this is necessary, this is what we need to do?
Well, there are a couple of things which have been in the works for some time. One is the thought that the direct tax should be made simple and that it should be safe for compliance. Direct taxation or the Income Tax Act will have to be a lot more simpler. So that work was announced in the July 2024 Budget.
Within six months, we were getting ourselves ready to get that income tax, the new Act ready.
In the process, the emphasis was more towards simplifying the language, reducing compliance burden, and also to make it a bit more user-friendly and not letting it suffer due to various interpretations, which also was sought to be termed as rent-seeking tools. We were essentially working on that.
It wasn't about rate restructuring, although for several years now, we have been looking at the ways in which the rates could be a lot more reasonably taxpayer-friendly.
Equally, after the July Budget, there was the voice of the middle class, which felt that they were ending up paying taxes. They were absolutely proud and happy to be taxpayers of this country, but also felt they didn't seem to have much in their way to redress their problems.
And there was also the feeling that the government was very inclusive in taking care of the very poor, focusing on vulnerable sections and so on.
So the voice which came wherever I travelled was that we are proud taxpayers. We are honest taxpayers. We want to continue to serve the country by being good taxpayers. But what do you think about the kind of things you can do for us?
Also, I had this discussion with the honourable prime minister who put me on the specific assignment of seeing what is it that you can come up with. And therefore, we did within the ministry work, and briefed the PM on what is before us, and guided by him we've come up with this.
Was he on board immediately, as soon as you went up with this proposal because it has a lot of financial burden on the exchequer?
Yes, there were different aspects to getting this proposal. So, with the new income tax act coming as a bill in Parliament, it was also time for us to take a call on it and not wait for the new bill to come up because the intention of the bill, as was stated in the July budget, was not to talk about the rates. That was essentially a finance bill.
I'll just push you on this a little bit more. How much did it take, how much persuasion did it take to get the prime minister on board, or was it a lot more complicated?
No, I think your question should be, how much did it take for me to convince the ministry and the board? So, it is not so much the PM. The PM was very clear that he wants to do something. It is for the ministry to have the comfort level and then go with the proposal.
So, more work that was needed was convincing the board about efficiency in collection and honest taxpayers' voices. All this was work here in the ministry, not so much for the PM.
In other words, the bureaucrats were the ones who needed to be convinced.
They are right because they have to be sure of revenue generation, that is their job, and therefore it is for them also to feel sure that the field formations will be doing their job and not deny the legitimate revenues which have to be raised.
So, they were not wrong in reminding me periodically, saying, what would it mean? But ultimately, everybody came around. So it was only after that that we went to the field.
So in other words, you heard the voice of the middle class, and you responded?
Prime Minister Modi and his government have always heard the voices of people from different sectors... industry leaders he meets, personally interacts with them, gets the inputs. He would also talk with the most deprived sections ...tribals, particularly vulnerable tribal groups, just as Rashtrapatiji is very keen on addressing their problems.
Prime minister also listens to all sections in the North East, particularly sections in the scheduled castes. I'm very happy to be a part of this government, which literally hears the voice and responds.
It is just the beginning. Is there more to come in terms of tax reforms? It looks like so many people are going to benefit from it. Would the ultimate aim be to increase the tax net?
Obviously, with this and without this, the attempt has always been to widen the tax net so that more Indians, who are in a position to pay come on board.So, maybe in the future Budgets, widening the tax net would come.
That attempt to widen the tax net is a continuous, ongoing exercise.
India has about 8.65 crore people in the tax net, if you include people who don't pay taxes, who file tax returns but don't pay it comes to 10 crore.
Of the 144 crore population, it is just minuscule compared to what it should really be. So, where is the gap?
Why are there so many more dishonest taxpayers?
I won't say, dishonest taxpayers. I think many people who are just outside of the fringe should be nudged to come in ...who have never been taxpayers or who have now reached that level of income, or even those who have avoided tax. (They) will all have to be brought on board. So, that is certainly a task before us.
We have to make sure that people understand the role of paying taxes and bring them on board.
It's a national duty to pay tax. Can this be done by reducing the tax rates, maybe further?
Haven't we done it this time? That is the first step towards the new tax bill. We didn't wait for the new tax bill to carry this rate reduction. This was something which we meant anyway. So, we brought it.
The new regime ... has certainly shown that rates will have to be steadily brought down. This time we made it smoother.
The tax slabs are also smoothly flowing from one to another, and the rates are also very predictable in multiples of five. Lots of thought has gone and I must appreciate the board and also the TRU, the division which takes care of the revenue matters, and the Department of Revenue, as they have done intense work, literally engaging with me on a day-to-day basis to make sure that we come up with rates which are going to be easier and acceptable.
And it is not just an attempt to give benefit to one small section of the taxpayers. Everyone, who's paying tax, will get something beneficial.
Photographs curated by Anant Salvi/Rediff.com