Finance Minister Arun Jaitley on Monday said sticking to the fiscal deficit target will be much easier from next year because of the implementation of new indirect tax regime.
“As the GST software system matures, with two-three anti-evasion measures put in place, compliance will automatically improve. That will improve (tax) collections. Therefore, sticking to fiscal deficit target will be much easier than current year,” Jaitley said at a post-budget industry interaction session.
In Budget, 2018, the government revised the fiscal deficit target to 3.5 percent of GDP for 2017-18 from 3.2 percent, indicating a deviation from the path of fiscal consolidation because of a spillover impact of the new indirect tax system—Goods and Services Tax (GST).
For the next financial year 2018-19, fiscal deficit target is pegged at 3.3 percent of Gross Domestic Product (GDP).
An 11-month’s indirect tax collection due to change in the accounting system from July 1, led to a shortfall indirect tax revenue. Hence, the tax collection for the month of March, 2018 does not become due before 20th April, which happens to be a part of 2018-19.
He further said GST has a direct impact on the income tax side.
The recent rationalisation of GST tariff increased profits of some companies, which gave a boost to corporate tax collection, he said, adding that the move led to an increase in direct tax collection.
Regarding inclusion of petroleum products under GST, the finance minister said that states are not in favour of bringing them under the new tax system.
“As GST experience moves on, natural gas and real estate are the areas that need to be brought in. Thereafter, we will keep trying for petrol, diesel and potable alcohol under GST,” Jaitley said.moneycontrol