The Indian government is identifying sectors that need additional stimulus, including tourism and hospitality, and is considering additional pandemic relief, according to the finance secretary.
“The government is constantly getting suggestions from various quarters, industry, etc., and as we have been doing, we will announce the next set of measures when the government feels it is necessary,” Finance Secretary Ajay Bhushan Pandey said in a November 2 interview with CNBC.
In May India announced a COVID-19 relief package worth INR 20 trillion, or approximately 10 percent of the country’s GDP. The package included a 25 percent reduction in tax deduction at source for nonsalaried specified payments until March 2021. In August the Ministry of Finance announced it would ease taxpayers’ goods and services tax compliance burden, providing an exemption for businesses with annual turnover of up to INR 4 million (about $53,600). It also said it would allow deferrals of GST payments, reduce interest rates, and waive or cap late fees at INR 500.
In the interview, Pandey noted that growth in GST revenue collections "reflects a healthy sign” for India’s economic recovery from the pandemic. He said GST revenue collections for October indicate that the growth will continue. In a November 1 release, the MOF said that the gross GST revenue collections for October was approximately INR 1.05 trillion, which is 10 percent higher than October 2019 revenues.
Regarding the recent Vodafone arbitration decision, Pandey said that the government is “studying it in detail . . . [and] exploring all legal options.” He noted that the government has until November 30 to appeal the decision of the Permanent Court of Arbitration in The Hague, Netherlands.
In its decision, the court held that the Indian government’s tax assessment of about INR 400 billion (about $5.4 billion), including penalties and interest, related to a key Vodafone acquisition involving Indian assets in 2007, was “in breach of the guarantee of fair and equitable treatment” set out in the India-Netherlands bilateral investment treaty.
Pandey said that for confidentiality reasons, he could not disclose detailed information about the government’s stance and legal advice received. “All aspects will be kept in mind before a final call is taken,” he said.
When discussing the concerns surrounding India's new faceless appeals process, Pandey said that many taxpayers have been pleasantly surprised that they do not have to meet with income tax officers. Pandey said that to date 17,000 cases have been decided using the faceless assessment.
Prime Minister Narendra Modi announced August 13 a platform for transparent taxation — which includes faceless appeals and assessment systems and a taxpayers’ charter — that he said aims to ease compliance and benefit “honest taxpayers.” The platform aims to replace direct contact between taxpayers and income tax officers in scrutiny tax return matters, notices, surveys, and assessments. The faceless appeals system also protects the identity of income tax officers.