Lok Sabha passes Finance Bill 2022; FM blames Russia-Ukraine conflict for rising fuel prices

The discussion on the Bill took place by deferring the time usually allotted for private members’ bills in the House

Finance Minister Nirmala Sithararaman, responding to the debate on the Finance Bill, 2022, cleared by the Lok Sabha on Friday, blamed the Russia-Ukraine conflict for rising fuel prices and asserted that the government was committed to reducing the burden on the common man.

To counter Opposition criticism on high inflation and the lack of any tax relief for the middle class in the Budget for 2022-23, Ms. Sitharaman recalled a speech by India’s first Prime Minister Jawaharlal Nehru blaming the Korean war amid soaring food prices in 1951, and late PM Indira Gandhi’s decision to sharply raise income tax rates in 1970. Unlike many developed nations, India had not raised taxes to finance the pandemic spending and the economy’s recovery, she said.

The passage of the Bill, with 39 amendments including clarificatory points regarding the taxation of virtual digital assets and the disallowance of cess and surcharges as a business expense, paves the way for the government to implement the provisions of the Union Budget from April 1.

Noting that the Finance Bill highlights how the government, under the leadership of the Prime Minister, took a ‘conscious decision’ not to raise taxes during the pandemic or to finance the recovery from it. Citing an OECD report, Ms. Sitharaman said at least 32 countries, including Germany, France, the United Kingdom, Russia and Canada, increased various tax rates during the COVID-19 pandemic while India did not.

“The guidance I received while preparing last year’s Budget and this year was that we shall not take the taxation route. As a result, this Finance Bill has been received as one of the boring and insipid ones, with nothing great about it. But it is indeed, I would think, a Budget that did not burden the common man, yet put the money where the multiplier would be maximum and there would be infrastructure creation of assets with a big-time increase in spending,” she said.

On MPs’ comments about corporates getting lower tax rates, Ms. Sitharaman said the rate cuts announced in September 2019 actually helped the economy, the government and the companies.

“In the year 2018-19, our corporate tax collection was only about Rs. 6.6 lakh crore, then COVID happened… In spite of that reduction and the COVID impact, we have already collected corporate tax of Rs 7.3 lakh crore till yesterday, so the reduction in corporate tax has given us the rewards in spite of the intervening year being COVID-hit,” she explained, adding that improving corporate health could also lead to greater employment.