Finance minister Nirmala Sitharaman on Monday said she had taken on board the suggestion from lawmakers to reduce personal income tax rates and it would be considered for its merit, rather than to bring parity with the government’s decision to slash corporate income tax rates.
Her comments on personal income tax rates came in response to a question from TMC member Saugata Roy during a discussion in Lok Sabha where she was piloting the bill to amend corporate tax rates.
“It is very different to compare developed countries and developing countries and emerging economies and then say they have income tax reduction and therefore you should give,” Sitharaman said. She added that the government has periodically given relief to individual taxpayers and several exemptions have been offered.
“Now, because we want more investments to come into this country, we have given it to all companies under the Companies Act to bring in parity of sorts and to say personal income tax… I would rather deal with personal income tax on its own rather than because I have done this, I should do that,” Sitharaman said.
She said she valued everybody who earned their living, paid their tax and took care of their family and business. “So, personal income tax will be considered for its merit,” Sitharaman said.
But Roy persisted with his demand, prompting the finance minister to say, “I have taken it as a suggestion.” The discussion over a cut in personal income tax rates gathered momentum after the government unveiled a sharp reduction in corporate tax rates in September to revive sentiment, attract investment and boost growth.
A government panel on direct tax has suggested relief for taxpayers and the finance minister had earlier said the government was examining the report. Experts have demanded a cut in personal income tax rates to boost demand and consumption, but the government has little headroom to slash rates, given concern over the fiscal deficit which the Centre has said will be kept at the targeted level of 3.3% of GDP.