Ficci asks FinMin to slash income tax rate to boost demand

The apex industry chamber Ficci today urged the finance ministry to consider reduction in personal income tax rate to 25 per cent in the forthcoming budget to boost consumer spending and revive the industry which witnessed contraction of 2.3 per cent in March.

In a pre-budget meeting with Revenue Secretary P V Bhide, Ficci President Harsh Pati Singhania pressed for reduction of personal income tax and corporate tax to 25 per cent.

The maximum income tax rate should apply over an income of Rs 10 lakh, the chamber said. At present, the maximum income tax rate of 30 per cent applies on income above Rs 5 lakh.

However, he admitted that there is little headroom for tax sops but favoured broadbased fiscal reform measures through a series of steps to push investment-led growth and leave more money in the hands of the people to encourage consumption spending.

"This year there is a particularly difficult situation with revenue deficit being there and I think the government has limited scope for doing things," Singhania told reporters after meeting Revenue Secretary P V Bhide.

The whole idea behind the exercises was to discuss measures required to put the economy on investment-led growth trajectory, he said.

The meeting assumes significance as the new government which may be in place in this month is likely to present the final Budget in the next two months.