The middle-income segment may benefit hugely from a government move to reduce the personal income tax rates, media reports suggest. Finance Minister Nirmala Sitharaman has hinted at the possibility of an overhaul of the tax rates and simplifying of the whole process in the next budget.
Sitharaman said the government was looking at lowering and rationalising the personal income tax rates, as well as working on more sector-specific measures to boost the slowing economy, according to a Business Standard report. "(This is) one among the many things we are looking at," the minister, embattled by a deepening economic slowdown, said at a leadership event on Saturday. She was responding to a question on the personal income tax rate cuts and rationalisation.
I am duly following it. We have moved to faceless scrutiny in the direct taxes."
A report submitted to the minister by a task force headed by Akhilesh Ranjan, a former member of the Central Board of Direct Taxes (CBDT), has reportedly recommended an increase in the threshold limit from the current level of Rs 2.5 lakh a year and overhauling the tax slabs. The contents of the report are yet to be made public.
The government was taking steps for creating a simplified taxation structure to ensure that assessees were not harassed, the minister said. "I am duly following it. We have moved to faceless scrutiny in the direct taxes. We have already started expanding it to indirect taxes as well," the report quoted Sitharaman as saying.
Sitharaman said businessmen who faced harassment by tax officials could take up the matter directly with the office of the revenue secretary or her own office. The government wanted to remove complexities in the entire taxation structure in the long run, the minister said. "We want to make sure that there are no ifs and buts in the entire taxation structure."
Sitharaman evaded a question on any likely economic stimuli saying that the government was working on them. "If I say yes, you will ask when. You will get back to me to say 'are you not too close to the Budget?' I will not say yes… At the same time, I will not say no, because we are working on them," she said.
The minister, however, said her government would remain well within the glide path that the FRBM (Fiscal Responsibility and Budget Management) panel had recommended. On the contrary, she said, many economists were suggesting a pause to following the path and give more stimulus.
Sitharaman expected an economic turn around as the public and private sector banks had distributed nearly Rs 5 lakh crore mainly in the hinterland as part of the outreach drive to boost consumption in October and November. The latest official data showed that gross domestic product (GDP) grew at 4.5 per cent during July-September, its slowest pace in over six years.