Synopsis
In a recent address, Finance Secretary Tuhin Kanta Pandey emphasized the significance of tax reforms in the Union Budget 2025-26, marking their first inclusion in Part-A. He outlined the government's strategy to enhance the tax base without increasing tax rates to foster economic growth.Key Takeaways
- Tax reforms are now a crucial element of the Union Budget.
- The government has opted not to raise taxes to encourage economic growth.
- Focus on broadening the tax base and promoting voluntary compliance.
- Introduction of Bharat Trade Net to streamline customs processes.
- Tax administration aims to be user-friendly and transparent.
New Delhi, Feb 4 (NationPress) Tax reforms are an essential element of the Union Budget, significantly influencing the overall economy. For the first time, they have been incorporated into Part-A of the budget, highlighted Finance Secretary Tuhin Kanta Pandey during a conference on Tuesday.
“An elevated taxation level can hinder growth, which is why we have made the courageous decision to refrain from increasing taxes. Our clear objective is to broaden the tax base, stimulate economic expansion, and taxes will subsequently increase,” Pandey stated in his presentation at the ASSOCHAM post-budget forum.
“Over the past three years, we have seen a growth of 20-25 percent in personal income tax. It’s not beneficial to burden the same taxpayers with additional taxes,” he clarified.
He emphasized the importance of developing more income-generating avenues and fostering a culture of voluntary compliance.
“Creating a budget involves balancing various priorities and is never merely an exercise in segments,” he remarked.
Pandey also mentioned that the Bharat Trade Net introduced in the budget aims to connect all stakeholders effectively and streamline the customs process, potentially exceeding the functionality of UPI.
“Adhering to standards is no longer sufficient; our GST framework is unparalleled globally, and we should take pride in our achievements,” he added.
Ravi Agrawal, Chairman of the Central Board of Direct Taxes (CBDT), Ministry of Finance, stated, “The Tax Department’s approach has evolved. Our guiding principle is that taxation is not solely about collection; rather, tax arises from income generation, leading to automatic tax payments. The amendments in the Direct Tax Act, changes in tax slabs, and rebates have been approached with this perspective.”
He highlighted that the rationalization of TDS and TCS provisions, decriminalizing these provisions, and the concept of updated returns in the budget are designed to enhance the ease of doing business.
The CBDT chairman emphasized that the government is taking a prudent, proactive, rule-based, user-friendly, data-driven, and non-intrusive approach, creating a transparent tax administration supported by technology.
Sanjay Kumar Agarwal, Chairman of the Central Board of Indirect Taxes & Customs (CBIC), remarked, “The rationalization of customs duty rates has been carried out on 8,500 out of 12,500 tariff lines relevant to industrial goods. Agricultural products and textiles were not modified due to their sensitive nature. These rates have remained constant for nearly two decades, with a widespread perception of high rates in India. Recent adjustments have brought rates down to 20 percent from a range of 70 to 20 percent, and rates above 70 percent have been reduced to 70 percent. An equivalent amount of EIDC has been applied to maintain effective duty rates at the same or slightly lower levels, easing the impact gradually.”
During the introductory address focused on ‘Analysis of Tax-Related Proposals,’ Manish Singhal, Secretary General of ASSOCHAM, praised the government for aligning the Union Budget 2025-26 with public expectations while maintaining fiscal discipline. The introduction of substantial tax relief for the middle class is anticipated to boost economic growth by increasing savings and consumption.
He also underscored the government’s dedication to creating a business-friendly atmosphere through initiatives aimed at easing business operations and financial deregulation, which will facilitate sustained business growth.
