For The 1st Time Ever, Govt. Asks Corporates, Individuals How Much Income Tax They Want To Pay!
Large scale changes and reformations have been a huge part of the finance ministry, this budget year, particularly after the term started off with the country’s first maiden finance minister and her team.
Taxes have always been a major issue with every sector of profession and has obviously left no citizen living in this country untouched. After her maiden budget on July 5, Sitharaman exempted start up cos from angel tax and cut down corporate tax rate by 25% from 30% for all companies, on 20 September.
Now, perhaps for the first time the finance ministry has decided to formulate the next budget by seeking suggestions on changes in direct and indirect taxes from industry and trade associations.
Finance Ministry Seeks Suggestions
Finance Minister Nirmala Sitharaman took the seat when India had been already ailing with slowdown in economy, putting heavier loads of possible expectation on her.
Subsequently, she will be presenting the annual budget for financial year 2020-21 on February 1, regarding additional measures to stimulate slowdown in economy, which was approved by the Parliament within a month of her budget being announced.
While the ministry continues to hold pre-budget consultations with representatives of different sectors and stakeholders, the Department of Revenue has put out a circular seeking suggestions for changes in income tax rates for both individuals and corporate, along with indirect taxes, like excise and customs duty.
This circular, dated Nov 11 has asked industry and trade associations for suggestions regarding changes in duty structure, rates and broadening of tax base on both direct and indirect taxes, along with a suitable justification for the same.
Along with this, there have been demands for a reduction in income tax rates for individuals too so that common man can have more money, for a consumption-led revival of the economy.
India’s economic growth had slipped to a six-year low of 5% in the April-June quarter and the revival may take a few quarters.
The government policy with reference to direct taxes in the medium term is to phase out tax incentives, deductions, and exemptions while simultaneously rationalising the rates of tax.
The government has also mentioned in its circular that while forwarding the suggestions or recommendations, it would be appreciated if the recomendee mentions their qualifications and externalities.
The GST Council, along with a body of central and state ministers, will make the final decision on the GST. It said that the request for correction of inverted duty structure, if any for a commodity, should necessarily be supported by value addition at each stage of manufacturing of the commodity.
It wouldn’t be feasible to examine suggestions that are either not clearly explained or which are not supported by adequate justification or statistics.