New Delhi: Budget 2020, which is scheduled to be presented on February 1, may bring good news for individual taxpayers as the government may cut personal income tax rates. “We are discussing tinkering with…income tax rates so that more money is put in the people’s hands,” a senior government official told Reuters.
All eyes are on Budget 2020 as this will be the second Budget of both the Modi 2.0 government and finance minister Nirmala Sitharaman. Several measures to boost economic activities are awaited. Earlier this year, the Modi government cut corporate tax rates to 22 per cent from 30 per cent. In the July-September quarter, the GDP growth was recorded at 4.5 per cent — the lowest in more than six years.
Soon after the corporate tax rate cut, clamour for a reduction in personal income tax rates gained momentum. A panel on Direct Tax Code in its report favoured moderation in personal income tax, simplification of procedure, and improving compliance with a view to raise revenue from direct tax.
Personal income tax collections amounted to Rs 4.7 lakh crore last year, or 2.5 per cent of GDP. This year’s target for personal income tax is budgeted to rise by an ambitious 23 per cent compared to a subdued 10 per cent growth in 2018-19.
On November 11, the ministry issued a circular asking industry and trade associations to give “suggestions for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same”.
The Budget Estimates for 2020-21 will be provisionally finalised after the expenditure secretary completes discussions with other secretaries and financial advisers.
On July 5, Sitharaman presented her first Budget while Piyush Goyal presented the interim Budget on February 1.