The government during 2009-10 is estimated to forego revenues of over Rs 5 lakh crore, which amounts to 50 per cent of its annual expenditure due to various tax concessions given to the prop up the industry hit by the global financial turmoil.
"The amount of revenues foregone continues to increase year after year...to reverse this trend, an expansion in the tax base is called for," said Finance Ministry while providing details of revenue foregone in the Budget papers.
The revenue foregone is estimated to rise from Rs 4.14 lakh crore in 2008-09 to Rs 5.02 lakh crore in the current fiscal. As a percentage of aggregate tax collection, the tax forgone will move up from 68.59 per cent 79.54 per cent during the same period.
"As a percentage of aggregate tax collection, the revenue foregone remains high and shows an increasing trend as far as corporate income tax (is concerned)... for the financial year 2008-09. In case of indirect taxes, the trend shows a significant increase for 2009-10 due to reduction in customs and excise duties", the papers said.
Revenue foregone assumes significance when compared with the government's total expenditure which was a little over Rs 10 lakh crore during 2009-10 after hiking public outlay to provide relief to the crisis-hit industry.
