Union Finance Minister Nirmala Sitharaman on Saturday said the government is working on more steps, including rationalisation of personal income tax rates, to revive the sagging economy.
The GDP growth slowed down to more than six-year low of 4.5 per cent in the second quarter of the current fiscal from 5 per cent recorded in the first quarter.
The government has taken several measures during August and September to boost the economy, she said at the HT Leadership Summit here.
Besides, she said, the public sector banks have disbursed nearly Rs 5 lakh crore without compromising on prudential norms in the last two months to boost consumption in the hinterland.
“So there are ways in which for giving stimulus for
consumption. We are adopting a direct method and also the method through which
we are spending on infrastructure, whose spillover can go to
core industries labour and so on,” she said.
Asked if there could be more measures announced to bolster economic activity, she said, “If I say yes, it will be when and if I say yes it’s also going to be back to me saying are you not too close to the budget. So I don’t want to say yes although I am wishing I can say. At the same time, I will not say no, because we are working on more.”
When asked if the government is considering rationalisation of the personal income tax rate for putting more money in the hands of people, the Finance Minister said, “One among many things that we are thinking of.”
Following the reduction in corporate tax in September, there has been a growing demand for a slash in the personal income tax to buttress consumption.
In the biggest reduction in 28 years, the government in September slashed corporate tax rates up to 10 percentage points as it looked to pull the economy out of a six-year-low growth with a Rs 1.45-lakh crore tax break.
Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.
Assuring that there will be no harassment of taxpayers, Sitharaman said the intent of the government is to further simplify taxation systems including removal of exemption.
Citing the example of corporate tax, she said, “From now on, they’re moving towards a greater simplified and exemption free. Therefore, has harassment-free therefore subjective interpretation free taxation regime.”
Besides, she said the government has introduced faceless assessment of direct tax and soon this will be introduced in indirect tax to eliminate harassment.
On the goods and services tax, the Finance Minister said the rate structure will have to be decided by the GST Council.
Eventually, the rates have to be rationalised and the entire tax system has to be simplified, she added.
“One, the tax per se, is getting complicated because of this unstructured bringing down of rates. Another, it’s also getting complicated because you want to be sure that you’re doing everything correct, but ending up asking for so much more information in a technology-driven system. People just get fed up of wanting to give so much information. So, we have problems in both the hands,” she said.
With regards to apprehension raised on the genuineness of data, the Finance Minister said, “There’s no doubt, we need to bring credibility back to the data.”
The government is aware of the debate which is going on data and its credibility, she said, adding the intention is to make sure that any kind of inappropriate methodology which is coming into the data will have to be addressed.