'Old Tax Scheme Will Naturally Go Away'

'We are not incentivising the old tax scheme. These taxpayers will also shift to the new regime after comparison.'

The tax concessions in the Budget will not lead to increase in prices, according to Revenue and Finance Secretary Tuhin Kanta Pandey.

He is confident of the government achieving 14.4 per cent growth in income-tax collection even after forgoing Rs 1 trillion revenue.

"We have not increased the fiscal deficit. Rather, these tax measures will boost savings, investment and consumption. More money has not been generated," Pandey tells Monika Yadav and Asit Ranjan Mishra/Business Standard.

How is the government confident of achieving 14.4 per cent growth in income-tax collection when nominal growth in GDP has been projected at 10.1 per cent in FY26?

We have projected corporation tax to grow 10.4 per cent and income tax 14.4 per cent.

Growth in direct taxes after including both has been budgeted at 12.5 per cent, Customs at 2.1 per cent, Union excise duty at 3.9 per cent, and central gods and services tax and compensation cess at 10.9 per cent.

Indirect taxes will grow 8.3 per cent. Gross tax collection has been assumed to expand 10.8 per cent.

Growth in income-tax collection has been higher than growth in GDP for the last few years because of various reasons, including efficient tax administration and voluntary compliance by a lot of people. But we have moderated our income-tax growth projection to 14.4 per cent and tax buoyancy at 1.42 for the next financial year.

Income-tax collection grew 19.7 per cent in FY23. In FY24, it surged 25 per cent, and in FY25, according to the Revised Estimates, it would grow 20 per cent.

Does the government fear inflationary risks because of the tax incentives?

We don't think they will lead to inflation, which occurs when there is a limited supply of goods and services.

We have not increased the fiscal deficit. Rather, these tax measures will boost savings, investment and consumption. More money has not been generated.

The supply of money is the same, so it's up to the individuals as to what they do with the money.

The government had announced a public sector policy. It set out a vision, but not much seems to have happened on this. And there is a feeling that you have given up on privatisation. Is it true?

There are challenges in that. In some public sector undertakings, we are trying to reduce our share by starting with listing and then gradually reducing our stake to 51 per cent through minority stake sales, etc.

There are challenges in privatisation where we transfer control and get away.

First of all, the buyers should be interested in the organisation. They buy these companies as an ongoing concern with all the assets and liabilities.

Buyers also have a lot of alternatives to buy loss-making companies such as through alternative investment funds or through the National Company Law Tribunal. That is why this is a much slower process.

Also, most PSUs have a lot of land. Take Bharat Earth Movers, which has a large landholding in Bengaluru. This makes the divestment process much more complex.

Many don't want to buy real estate and value companies based on their cash flow. So, we need to separate real estate from the companies, and this even gets challenging in listed companies. These things can't be done in anticipation.

We have a value-creation strategy. People get returns through dividends and capital gains. There are five elements to it: Performance monitoring, capex growth, dividend policy, communication of performance, and calibrated disinvestment strategy.

We also have to take care of our investors and will follow a market-based strategy. We share information related to dividend and divestment.

Are you confident about the increase in non-tax revenue? Some reports suggest the profitability of oil companies may come down after Donald Trump took over as president in America?

We are confident about achieving the non-tax revenue target next financial year.

The US has not taken measures against India. So I don't see any impact on the profitability of oil PSUs. Oil prices are stable, and they are likely to remain subdued.

Increase in oil prices isn't good for India. So the oil prices will not increase because of the Trump administration.

Large individual taxpayers are still sticking with the old tax regime and some experts suggest that even with changes in the new income tax regime, the old one is still more advantageous. What do you have to say about this?

We are not incentivising the old tax scheme. These taxpayers will also shift to the new regime after comparison. We have kept the option of these schemes. These people will also move to the newer one.

The old tax scheme will naturally go away.