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CII recommends slashing of income tax rates in upcoming budget

CII recommends slashing of income tax rates in upcoming budget

The Confederation of Indian Industry (CII) has proposed a reduction in rates of personal income tax, and a rate cut in the highest GST slab of 28% in order to revive demand.

CII recommends reducing 28% GST slab rate, slashing income tax rates CII recommends reducing 28% GST slab rate, slashing income tax rates

A day before Finance Minister Nirmala Sitharaman starts the customary pre-budget meetings with stakeholders, the Confederation of Indian Industry (CII) proposed a reduction in rates of personal income tax in order to revive demand. This could benefit nearly 5.83 crore individuals, part of the income tax regime, who had filed income tax returns (ITRs) for assessment year 2022-23. 

The CII also proposed a reduction in the highest 28 per cent GST slab on consumer durables. If accepted, this would not only increase the amount of disposable money in the hands of those who pay direct taxes, but would also lead to reduction in prices of commodities that attract high GST rates. 

The confederation also wants the government to decriminalise GST. It argued that there are adequate penal provisions for deterrence against evasion of taxes already in-built in the GST law. It also recommended that the applicability of prosecution provisions should not be based on the total amount of tax evaded but on the ‘real intent’ to evade taxes. 

However, experts are not upbeat on the possibility of application of CII’s proposal. The Department of Revenue said that direct tax net collections in FY 2022-23 (as on 17.09.2022) stood at Rs 7 lakh crore, compared to Rs 5.68 lakh crore in the corresponding period of FY 2021-22, representing an increase of 23 per cent. .

Similarly, the proposal for reduction in the highest slab of GST will be decided by the GST Council. In July, Revenue Secretary Tarun Bajaj had stated that the government might reduce the number of tax slabs but would continue with the top GST slab of 28 per cent for luxury and sin goods. GST collection for October stood at Rs 1.51 lakh crore, the second highest since July 2017. 

The CII has recommended subsidy rationalising for fuel and fertilisers to cut non-priority expenditure. It also added that the government should step up spending from the current 2.9 per cent of the GDP to 3.3-3.4 per cent in the next FY 2023-24. It also proposed an escalation in capital spending by the government to 3.8-3.9 per cent by FY25.

It also proposed the speeding up of PSU privatisation process in the next fiscal to meet the divestment targets. Boosting employment generation by hiking rural infrastructure projects, higher outlays for green infrastructure, deepening of corporate bond market, defining roadmap to bring down fiscal deficit to 6 per cent of GDP in FY24 were some of the other measures proposed by the CII.

Also read: FM Sitharaman to begin pre-budget consultations from today