After the corporate tax cuts to accelerate the economy, can the government also give exemption in personal income tax. It is being told that this is the next agenda of the Modi government. Bibek Debroy, the head of the Prime Minister’s Economic Advisory Committee, also confirms this. He said, “they have reduced Corporate tax, the government will cut the income tax rate, eventually.”
However, he also said that with the lower tax rate, the system of exemptions may end.
Former vice-chairman of NITI Aayog, Arvind Panagariya wrote, Abolishing the exemption by reducing the top personal income tax rate to 25% of the corporate profit tax rate will curb corruption and reduce tax disputes.
Increasing the tax base will not affect the tax rate reduction (on revenue).
Modi Govt going to Cut Taxes
The task force constituted a radical change in income tax has submitted a report to the government in August, suggesting a 5%, 10% and 20% tax slab drastically reducing the tax rate to 5%, 20 more 30%.
Ajay Bhushan Pandey, revenue secretary, says, “Before we make a decision on that (income tax rate), we have to look at the revenue trends, budgetary requirement, and financial deficit.”
A cut in income tax means that demand should be increased by placing more money in the hands of the consumer, which will remove the sluggishness. Nobel laureate Abhijeet Banerjee says, ‘The Indian economy is going towards an uncontrolled decline.
You not going to worry about financial stability, but more about demand. I believe that there is a big demand problem in the economy at the moment.
According to the report of US Bank Merrill Lynch, if there is a reduction in the tax slab. Then it will have an impact of Rs 1.75 lakh crore on the revenue. Out of which the central government will bear the burden of 1 lakh crore. However, it compensates Rs 75 thousand crores. State governments will have to.