NEW DELHI: Indian government expected to collect $148 billion (Rs 919,842 crore) tax revenue in 2015-16, while it is expected $95 billion tax benefits for companies and individual taxpayers in 2014-15.
This forgone revenue, or tax benefits, is twice the defense budget allocation of Rs 247,000 crore in 2014-15.
Tax-revenue forgone is a contentious issue–an “incentive” or a “sop”, depending on ideological position–and becoming more so at a time when the National Democratic Alliance government plans cutbacks to India’s subsidy bill of Rs 2,27,287 crore ($36 billion).
While India’s subsidy bill is likely to fall almost 10%, the tax-revenue forgone is expected to increase by 7% from 2013-14.
Those on the left hold “sops”–such as accelerated depreciation, deduction of export profits of units located in special economic zones (SEZs), area-based exemptions and waivers on import duties–as evidence of government largesse to business at the expense of the poorest. Those on the right argue that tax-revenue forgone is an important business “incentive” to help the economy grow, without which the needs of the poor cannot be addressed.
