The finance minister also said that most of the fiscal deficit slippage of 30 basis points from the target for this fiscal would have been bridged had the government factored in full-year GST collection, instead of that of 11 months following the introduction of a new accounting system.
Real estate and natural gas will likely come under the goods and services tax (GST) ambit before petrol and diesel, as states are reluctant to have these petroleum products in the GST net as yet, finance minister Arun Jaitley said on Monday. Commenting on his promise to bring down the corporate tax rate to 25% even for those having turnover above Rs 250 crore, Jaitley said the 7,000-odd companies that will be outside the 25% bracket are effectively paying 22-23% tax, after factoring in exemptions to them. The government will have greater ability to absorb the potential revenue losses due to reduced tax rate when exemptions are withdrawn, he said. However, having gone through the adverse consequence of Vodafone-like retrospective amendments, the government would rather let exemptions get over, as there are sunset clauses attached to them. And any premature withdrawal of exemptions could lead to litigations, as companies typically base their business decisions on exemptions as well, said Jaitley.
The finance minister also said that most of the fiscal deficit slippage of 30 basis points from the target for this fiscal would have been bridged had the government factored in full-year GST collection, instead of that of 11 months following the introduction of a new accounting system. He said earlier indirect taxes for a particular month were collected in that very month. However, since GST for a particular month is collected only by the third week of the next month, the government will be able to collect only 11 months’ revenue in the first year of its launch; hence, the shortfall in indirect tax revenue.
The government has estimated FY18 fiscal deficit at 3.5%, higher than the target of 3.2%. for the next fiscal, the target is fixed at 3.3% instead of 3% aimed earlier. The ambitious fully government-funded National Health Protection Scheme (NHPS) announced in the Budget to provide Rs 5-lakh-a-year health cover to 10 crore families will cost Rs 10,000-12,000 crore annually. The Centre and states will share the cost in a 6.:4 ratio.