Budget 2019: No question of breaking convention, taxpayers need certainty, says revenue secretary

By announcing tax proposals in the interim budget, finance minister Piyush Goyal has not broken the convention as the taxpayers need certainty about tax burden for the full year, said Ajay Bhushan Pandey, revenue secretary.

“We have seen all the past interim budgets and then the constitution allows that the tax proposal has to be declared before the beginning of the next year," said Pandey.

"However, as per the convention, the main tax proposal used to be presented at the time of regular budget but in this particular case for the lower income earners, they must know on April 1 what will be their tax burden during the entire year," Pandey told CNBC-TV18.

In a major relief for the salaried class, finance minister Piyush Goyal announced full tax exemption for income up to Rs 5 lakh per year. Individuals falling under the said tax slab will get full tax rebate.

He further added that all the direct tax relief measures will be applicable from April 1 of the current fiscal year.

The government said it will increase the exemption limit for income tax paid by individuals from the current Rs 2.5 lakh to Rs 5 lakh, providing major relief to salaried class. This translates to a benefit of Rs 18,500 crore to more than 3 crore taxpayers.

The government has introduced the bill in the parliament to continue the existing rates and also provide some tax relief particularly to low-income earners, middle class, senior citizens, pensioners, small traders and businesses, Pandey said.

On expected revenue loss, Pandey said, “I wouldn’t say this is a revenue loss. This much of benefit has been given particularly to the low income earners because what we have seen is that during the last four and a half years, the tax base has increased. Our tax collection has doubled and this is all because of the tax reforms and particularly a large number of middle income earners have come into taxation.”

India set a fiscal deficit target of 3.4 percent of gross domestic product (GDP) for the year ending March 2020, higher than a previous estimate, and also said it would breach the current year's 3.3 percent deficit target.