Asserting that the new dispensation is not a high-tax government, Finance Minister Arun Jaitley said on Friday that lower taxes and duties were aimed at improving savings for investment and making manufacturing competitive to revive growth.
Replying to the discussion on Finance Bill, he also announced some minor concessions for mutual fund industry and giving discretion to CBDT on levy of penalty for late filing of tax returns.
Jaitley reiterated government's decision not to resort to retrospective tax amendments to create a new liability and promised to look into the controversial GAAR (General Anti tax Avoidance Rules).
"Ours is not a high-tax government. High tax government will not encourage business and industrial activity in India. A high-tax government will never be able to create jobs.
"A high-tax government will never be able to create a low-cost manufacturing situation...ultimately what do consumers want to buy. They want to buy products. They don't buy taxes," he said. He was answering criticism from members who sought higher taxes for revenue mobilisation.
"We are interested in creating a situation where the sentiments in regard to Indian economy, which had been disturbed in the eyes of investors in comparison to the global economy, is revived," he said. The Lok Sabha later passed the Finance Bill marking completion of the budgetary exercise for 2014-15 in the lower house.
Jaitley, who announced some minor modifications in the budget proposals, said that tax concessions provided by him were aimed at lowering the cost of manufacturing and boosting industrial activity.
Jaitley also dismissed criticism that lower taxes were aimed at helping corporates. "If you load every product with very high level of taxes, your products will become non-competitive in the market," he said.
Citing the example of China, he said, "they have mastered the art of low cost manufacturing" and that was the reason why people by Chinese products. Announcing modifications in his tax proposals, Jaitley said that the high tax rate of 20% on the debt mutual fund will apply from July 10, the date of the presentation of the budget, and not from April 1, 2014 as proposed earlier.
In order to provide some relief to the tax payers filing returns late and paying penalty on daily basis, the Minister said that CBDT will be empowered to exercise discretion in this regard. He also expanded the scope of Settlement Commission to include cases where proceedings have already been initiated.
These modifications, he added, "will further simplify and smoothen the tax structure of the country and help us in raising the revenue because this year we need a higher revenue itself because of meeting the fiscal deficit targets." Stressing that there was no contradiction in being pro-poor and pro-business, Jaitley said, "unless you are able to generate revenues, how will you service the poor people in the country? How will you have poverty alleviation schemes in the country ?"
With the economy doing well it would be possible to take care of the least privileged, which account for 30% of the population, he added.