On Saturday, after detailed presentations by the Department of Economic Affairs, the Department of Revenue, the Department of Expenditure and DIPAM, the Prime Minister expressed his satisfaction with regard to the broad parameters in relation to the economy and the macro economic data that had so far emerged for this year, Mr. Jaitley said.
On Friday, the government had announced five-pronged measures to fund the current account deficit (CAD). However, till now finance ministry has resisted pressure to cut taxes on fuel.
Talking to media personnel after the meeting, Finance Minister Arun Jaitley said that external factors like policies adopted by the United States, trade tensions and skyrocketing crude oil prices are impacting economies like India, despite "strong fundamentals". This comment appears to be reply to some experts who fear that the fiscal deficit will be higher than the budget target as deficit (difference between income and the expenditure of the Government) for the first four months (April-July) of the current fiscal has already exceeded 86.5 per cent. "I am reasonably confident of the government meeting the total tax receipts target, combining direct and indirect taxes, as any slippage on indirect tax collection may be compensated by growth in direct taxes".
With regards to Masala bonds, Jaitley said it has been made a decision to do away with the withholding tax on bonds issued till March 2019.
At Saturday's meeting, the second in two days, the Prime Minister reviewed the economic situation. "There is phenomenal increase in the assessee base.in the quantum of advance tax which has been paid", he said.
The Minister said that black money measures such as demonetisation and GST have had their effect on direct tax collections.
On GST, he said the new indirect tax regime is settling down and "with the kind of pick up in consumption which has taken place, obviously will have an impact on GST collections in the future months".
He added, "As far as the fiscal deficit is concerned, we are confident that we will meet the 3.3 percent target".
Experts said that the optimism on meeting tax target was well placed.
The finance minister tried to assuage investors that economic growth would not be compromised while containing the fiscal deficit. "The inflation is broadly under control". The government had in the budget projected direct tax collection of Rs 11.5 lakh crore for 2018-19 fiscal. Masala bonds will be exempted from withholding tax this financial year and Indian banks will be allowed to become market makers in masala bonds including by underwriting.
Economic Affairs secretary Subhash Chandra Garg said, while it is hard to give a specific number, it should have an impact of $8-10 billion.