NEW DELHI: A flat tax rate without exemptions, new slabs for those earning higher incomes, cuts in personal income tax in line with those in corporate tax — these proposals are being examined ahead of the budget as the government eyes ways of boosting consumption and reviving growth.
The finance ministry will present arguments for and against these suggestions before a decision is taken at the highest level, a government official said. The budget will be presented in February.
“All options are being examined… Any such move needs to be examined in the context of gains it can bring to the overall economy vis-a-vis the cost it entails,” the person said.
An alternative to income tax cuts is putting more money in the hands of the people directly through schemes such as PM-KISAN or enhancing the spending on infrastructure. Any possible change in the structure will only benefit the 30 million individuals who pay income tax, said the person, adding that the cost to the exchequer needs to be balanced with benefits by way of a consumption boost.
On the other hand, “infrastructure sector spending has a multiplier effect”, said the person.
The government has already given away Rs 1.45 lakh crore through corporate tax cuts, but that’s seen as part of broader direct tax reform aimed at attracting investments. But it sparked calls for cuts in personal income tax, since there were no reliefs in this regard in the last budget. (ANI)
