Hoping to meet the indirect tax collection target this fiscal despite a negative trend in the first four months, Finance Minister Pranab Mukherjee on Tuesday ruled out tax cuts to tackle the drought faced by nearly half of the country.
"I do not know because I am not thinking of giving any tax concessions. Therefore, I am not concerned with that part," he said.
Mukherjee was talking to reporters after addressing the annual conference of chief commissioners and directors generals of indirect taxes. He was asked if drought would lead to slippages in indirect tax collection.
He exuded confidence that indirect tax collection target for the current fiscal would be met. "I am hoping so," he said.
The government has set a revenue target of about Rs 270,000 crore (Rs 2,700 crore) from indirect taxes during the current fiscal.
Mukherjee expects an improvement in indirect tax collection from the third quarter, although it has declined 28 per cent in the first four months of FY'10.
"I am hoping that the trend that we have noticed in the first quarter...so I am expecting improvement from the third quarter," he said.
He said the negative growth of indirect tax collections in the first four months was a matter of worry and reflected the economic slowdown and consequent stimulus measures.
As the economy started getting impacted substantially after financial services icon Lehman Brothers collapsed in the middle of September last year, the government announced stimulus measures like excise duty cut by six per cent and service tax by two per cent.
"No doubt, this trend (of declining indirect tax collections) reflects the overall slowdown of the economy and the effect of stimulus measures," Mukherjee said.
On austerity measures announced by the finance ministry on Monday, he said government alone cannot entirely control expenditure. So the Lok Sabha speaker and Rajya Sabha Chairman have been requested to issue directions on expenditure relating to both the houses.
He, however, did not give any specific figure on the expected savings from 10 per cent cut in non-plan expenditure that the finance ministry directed every ministry and department to resort to.
Asked if Goods and Services Tax (GST) will be introduced as per schedule on April 1, 2010, he said, "talks are going on. We have identified certain areas where there is convergence and certain areas where there is likely to be convergence."
In this respect, the Empowered Committee of state finance ministers is meeting on September 16.
On withdrawal of the stimulus packages, he reiterated that Finance Ministers at G-20 meeting agreed that economic situation globally is still not good and "it would not be desirable to work out an exit strategy at the moment."
