The man behind Finance Minister Arun Jaitley’s, Union Budget tax proposals, Revenue Secretary Hasmukh Adhia, says that the government has increased the tax base and added 40 lakh new tax payers without much ado.

“The tax base has been increased but it is just that we have not mentioned it in the Budget as it is a document of policy changes,” he said. In a post-Budget interaction with BusinessLine, Adhia explained how the tax base has been expanded unearthing ₹20,000 crore undisclosed income in the last two years, giving the government confidence on its revenue projections. Excerpts:

The tax base has not been increased in the Budget, though the government has been talking about revenue mobilisation…

The base has been increased, but it is just that we have not mentioned it in the Budget. This year more than 40 lakh new taxpayers have been added and this we have done by adopting different mechanisms by being non-intrusive like tracking people through PAN numbers.

We have full information on all transactions. For example if someone has bought a house worth ₹50 lakh and he has not filed his return, first we ask him if he is taxable and if so to file return. If he fails to do so, we send a mild reminder, till he files it. Once people know that the government is watching, they do want to cooperate and file taxes.

Even for those under Tax Deducted at Source, we tell them that their TDS credit is with us and in case they want refund, they should file their return.

So basically more technology will be used to track tax defaulters…

Technology can help the tax department in a big way. There is also a fear factor – that the government can track you. In fact, it had also prompted the demand for one time chance to come clean, which we have announced – new compliance window. In the last two years, through various investigation mechanisms, search and seizure operations, we have been able to unearth income of ₹20,000 crore.

How much revenue you expect to generate from phasing out exemptions, as the Budget also talks about lower corporate tax rates for small companies?

We have already given an exemption phase out plan. The gain from the exemption phase out will be seen from April 2017 and it will be gradual. The units that are getting a 10-year holiday will get it for the remaining period.

In 2017-18, we will only gain ₹3,000 crore. But, if we cut corporate tax by one per cent across the board, it would lead to a loss of ₹15,000 crore. Can the government take a hit? So instead, we decided to lower rates for small companies – revenue loss of about ₹1,500-₹2,000 crore. So in spite of not gaining anything from the exemption phase out, we are trying to give some tax cut.

The Budget talks about levy of tax on charitable institutions that ceases to exist or becomes ‘non-charitable’. How will it work, what will be the basis of valuation for tax purpose?

There are a lot of institutions that started as a charitable institution – schools, colleges or hospitals – and they have taken advantage of Section 12AA of the Income Tax Act, 1961 to get exemption. Along with this, they benefit under Section 80 G. Most of their assets are created out of tax exempt income. Now suddenly, if they decide not to take benefit under these two Sections and convert themselves into for-profit institutions, they will have to pay a one time tax as the assets have been created from tax exempt income.

We will be putting a one-time levy at the time it switches to a for profit organisation. The levy will be on the entire asset transfer. They can give it to another trust, then we don’t have a problem, but if they want to convert a non-profit hospital into a for-profit one, then it is a loophole, we are trying to plug.

How comfortable are you with your revenue projections? Will you tweak the excise or customs duty if crude oil prices fluctuate?

We are very comfortable. In the current year, we will achieve the target fully. Next year, targets are very realistic and I am very confident we will meet them.

We are not making any assumptions on crude oil except assuming that the present global oil prices of $30-$35 a barrel will continue. It is not as if every time there is a reduction in prices, we have hiked the excise duty. There are many times we have passed it on to the consumers.