Modi's advisor for removal of tax exemptions

Modi's advisor for removal of tax exemptions

A top official within the Prime Minister’s Office, on Monday, made a pitch for removal of all kinds of tax exemptions.

“Where is the money going to come from? So far as taxes are concerned, there are direct tax and indirect… On both of those, the overall big picture is to eliminate exemptions. As long as exemptions are there, there would be discretion. And where there is discretion, there will be abuse,” Bibek Debroy, Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM) said while delivering a lecture on ‘Making of the New India’.

Debroy’s statement has come at a time when Prime Minister Narendra Modi has been pitching for the cut in the GST rates, aimed at wooing the voters ahead of the general elections next year. He also said that the government is losing 5-5.5% of its revenues because of the exemptions under both direct and indirect taxes.

Debroy’s comments also hold significance as the government is staring at a shortage of funds along with a widening fiscal deficit. There are various tax exemptions available to the masses under the Income Tax Act, mostly covered under Section 80C to 80U.

During his speech at the Indian Institute of Science (IISc) in Bengaluru, Debroy also advocated the process of decentralisation of power.

“The question that we should be asking is whether the country needs decentralisation or not. If we start asking whether it is ready or not, let me tell you that the country will never be ready for it,” he said.