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News INCOME TAX

  • Nov 19, 2019
  • Tax reforms: Govt must boost woefully short buoyancy, says Finance commission chairman

    Finance Commission chairman NK Singh on Monday stressed that the government must complete unfinished tax reforms to improve the woefully inadequate tax buoyancy witnessed in the past one-and-a-half years, while advocating that simple direct tax code should be implemented soon and that the GST Council ought to go to the drawing board to address compliance issues. Singh said that the tax buoyancy should at least be 1.2-1.3 for the country. However, according to an estimate by FE, if the revenue collection trend for the April-September period holds for the entire year, the buoyancy would only be 0.2. This would be the lowest tax buoyancy recorded at least since FY14. The buoyancy, which typically refers to the ratio of tax growth to nominal GDP growth, has been steadily declining from a high of 1.6 in FY16. However, Singh said that recent measures taken by the finance ministry would have multiplier effect in the long term. “We need to see healthy, robust tax buoyancy for which the finance ministry has announced major initiatives, including changes in the GST compliance, which I think will have a multiplier effect.