Finance Minister Nirmala Sitharaman on Saturday said the government was looking at lowering and rationalising the personal income tax rates, as well as working on more sector-specific measures to boost the slowing economy.
“(This is) one among the many things we are looking at,” she said at the Hindustan Times Leadership Summit here, while responding to a question on the personal income tax rate cuts and rationalisation.
A task force headed by Akhilesh Ranjan, former member of the Central Board of Direct Taxes (CBDT), has already submitted its report to the finance minister, but its contents have not been made public. It is learnt to have recommended an increase in the threshold limit from the current level of Rs 2.5 lakh a year, and overhauling the tax slabs.
Sitharaman also said the government was taking steps towards creating a simplified taxation structure to ensure that assessees were not harassed. “I am duly following it. We have moved to faceless scrutiny in direct taxes. We have already started expanding it to indirect taxes as well,” she said.
She said she had asked businessmen to come to her office or that of the revenue secretary in case there was any harassment by tax officials.
The finance minister said the government wanted to remove complexities in the entire taxation structure in the long run. “We want to make sure that there are no ifs and buts in the entire taxation structure.”
Sitharaman was a bit evasive when asked whether more stimulus measures would be announced, but did say that the government was working on them. “If I say yes, you will ask when. You will get back to me to say ‘are you not too close to the Budget?’ I will not say yes…. At the same time, I will not say no, because we are working on them.”
She, however, said the government would remain within the glide path recommended by the FRBM (Fiscal Responsibility and Budget Management) panel, even as many economists were telling the government to pause on the path and give more stimulus.
The finance minister said the public and private sector banks had distributed nearly Rs 5 trillion to the people in the hinterland as part of the outreach drive to boost consumption in the month of October and November.
The latest official data showed that gross domestic product (GDP) grew at 4.5 per cent during July-September, its slowest pace in over six years.
“I would like to tell you that the 4.5 per cent figure is for July, August and September. Post July, through August and September, we kept coming out with announcements and interventions. Nearly Rs 5 trillion were given in 400 districts of the country, in the hinterland and not in metropolitan cities,” she said.
Besides, she said, 72 million farmers benefited from the first two tranches of PM-Kisan, which gives Rs 2,000 each to farmers every four months. “The figure has come down a bit after that. But we are making sure that these accounts are Aadhaar-seeded so that the money does not go into the ghost accounts,” she said.
Without elaborating much, she said goods and services tax would be streamlined. “We shall have very good and streamlined GST.” She said distortions had crept into the GST structure as the rates were cut and input tax credit got smaller. “In enthusiasm to reduce more taxes, credit became miniscule and the framework agreed up on the phase one of GST got distorted.”
On the states’ concern over delay in the payment of compensation to them, she said the cess component of GST was not adequate to compensate states. “State finance ministers met me. Their concerns are genuine. We will honour our commitment.”
To a query whether the GST rates would be hiked, she said it was a prerogative of the GST Council and she did not want to pre-empt it.
On the current problems of the financial sector, she said banks started getting into the role of long-term finance institutions, resulting in the asset-liability mismatch. Later, non-banking finance companies also saw this mismatch, she added.
“The RBI is constantly monitoring the health of NBFCs and I am in touch with them. I don’t want anyone to fall off the cliff,” she said.
On the credibility of the official data, she said the government was seized of the matter.
The finance minister said while the target of $5 trillion economy was a macro picture, the government wanted to ensure that everyone had a house, each house had a toilet and electricity, and that people had good health insurance.