IT Correspondent
Mumbai/New Delhi, Jan 29:
In view of the expenditure of nearly Rs 65,000 crore for procurement of covax dosages and their transportation, the Union the government may introduce a coronavirus cess or surcharge on individual taxpayers in the upcoming budget.
According to experts, a COVID-19 cess may be levied on the higher income groups, in the Union budget to be presented by Union Finance Minister Nirmala Sitharaman on Monday, First February, 2021.
Sitharaman has already said her upcoming Budget will be like never before and alluded to it as “unlike anything seen in the last 100 years.” Budget 2021-22 assumes special significance in wake of the Covid-19 pandemic. It will be the first Budget of the NDA government in the midst of the ongoing Covid19 pandemic. And in a significant break from tradition, this will be the first time in the history of independent India that the Budget will be paperless.
Finance Minister Nirmala Sitharaman on Friday tabled the Economic Survey in the Lok Sabha. In the Economic Survey, which charts out the course of India’s recovery, the government pegged the country’s fiscal deficit at 3.5 per cent of GDP in the financial year ending in March. “In order to sustain the recovery in aggregate demand, the government may have to continue with an expansionary fiscal stance,” the report said, adding the growth recovery would facilitate buoyant revenue collection in the medium term and enable a sustainable fiscal path. The survey, which comes just ahead of the Union Budget 2021 for the new fiscal year, also formed a “V shaped” economic recovery.
A cess is a form of tax levied by the government on tax with specific purposes till the time the government gets enough money for that purpose. A cess is imposed as an additional tax besides the existing tax.
The COVID-19 pandemic has severely disrupted the economies across the globe in unprecedented ways. To provide relief to pandemic-battered sector, the government announced “Atmanirbhar Bharat” stimulus package. From extending deadlines for filing tax returns to reduction in specified withholding tax rates, several measures were adopted to protect the economy. The centre also introduced the LTC cash voucher scheme to boost spending. To push growth and the economy ahead, the centre is likely to bring some policies to raise revenues.
Mumbai based “HDFC Securities” in a report titled Pre-Budget 2021 Expectations, said that the government could impose “Corona Cess” to meet the Covid vaccine-related costs. “Disinvestment target for next year is likely to be ambitious as certain planned disinvestments for FY21 spill over into the next fiscal,” it added.
Similarly Founder and chief executive officer of “ClearTax” Archit Gupta said that “”2020 has been a challenging year for the government and taxpayers alike. Government has been struggling with poor revenue collections, while on the other hand there is increased pressure to make investments in infrastructure projects to generate jobs and push the economy ahead”.
Moreover, the centre had started the first phase of nationwide COVID-19 vaccine drive this month. The entire cost of immunization drive will be borne by the government. “With this backdrop, it would be unfair to expect any tax reliefs. However, the government may choose to bring in a COVID-19 cess or some other similar cess of between 2-4%,” said Gupta.
“This cess may be made applicable to higher income brackets to cover for the money spent on meals and other assistance to the poorest during coronavirus as well as the costs involved to vaccinate everyone in 2021 and further. It is likely that businesses may face this cess if not individuals,” he added.
