Will the Budget in February 2020 see a further reduction in the personal income tax rates/slabs? Finance Minister Nirmala Sitharaman has said she would consider the suggestion by some members of Parliament in this direction.
Replying to Saugata Roy, an MP of the Trinamool Congress, the FM said she would take his suggestion to reduce income tax for individual taxpayers.
The debate in Parliament was on the ratification of the ordinance issued when the Parliament was not in session to reduce the corporate tax to 15%. Roy’s argument was that if the corporate tax could be reduced, why not the individual taxpayers?
The FM responded by saying that she valued the people who earned their living and took care of their family while paying their taxes as well. However, she pointed out that the successive budgets over the past few years had addressed this issue and some concessions have been given. She also brushed aside the contention that some other countries have announced personal income tax rate cuts, and said it is not appropriate to compare some of the developed nations to our country in this regard.
Nirmala Sitharaman pointed out that the move to reduce corporate tax at this juncture was to match the tax rate being charged on businesses in a few other emerging Asian economies such as Thailand and Vietnam, which have seen gains due to the ongoing trade war between the US and China. Investors preferred these countries due to the lower taxation levels, and India wanted them to consider making investments here as well and that was the reason the rates were lowered and to keep the parity. Existing businesses too were covered through the ordinance.
Despite all these explanations, the TMC member persisted and then she said she is ready to consider his suggestion for what it is, a suggestion.
The fact is when the economic slowdown was being discussed in different forums, one suggestion that came forth was that to boost the demand among the consuming public, the government could consider a cut in the income tax rates and put some more money in the pockets of the individuals.
With questions being put to the FM on the fiscal deficit when the year closes, this is hardly the time for her to consider foregoing additional revenue.