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Finmin seeks industry inputs on tax rates, exemptions ahead of Budget

The Union Budget for Financial Year 2023 is expected to be presented on February 1

Topics
Finance Ministry | Tax rate | Budget

Shrimi Choudhary  |  New Delhi 

Finance Ministry, Ministry of Finance
Photo: Shutterstock

Ahead of the Union Budget, the has emphasised that tax exemptions will be phased out and tax rates would be rationalised in the medium term.

The ministry has sought suggestions from trade and industry stakeholders, asking them to submit their recommendations by November 15 on policy changes in both indirect and direct taxes by giving economic justification.

“Send your suggestions for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same,” the ministry’s revenue department said in a letter to the Trade and Industries Association.

The Union for Financial Year 2023 is expected to be presented on February 1.

The letter added: “As can be seen that the government policy with reference to direct taxes in the medium term is to phase out tax incentives, deduction and exemptions while simultaneously rationalising the rates of tax.”

Currently, more than 100 exemptions and deductions of different nature are provided in the Income-Tax Act.

“We will review and rationalise the remaining exemptions and deductions in the coming years with a view to further simplifying the tax system and lowering the tax rate,” Finance Minister Nirmala Sitharaman had said during her speech. She had said that around 70 of them had been withdrawn in the new simplified regime.

The department has asked the trade and industry bodies to supplement and justify their suggestion and views by relevant statistical information about production, prices, revenue implication of the changes and any other supporting information.

The letter, which also dwelt on the inverted duty structure, said the request for correction of the structure for a commodity should necessarily be supported by value addition at each stage of manufacturing of the commodity.

“It would not be feasible to examine suggestions that are either not clearly explained or which are not supported by adequate justification/statistics.” the ministry noted.

The ministry also asked for suggestions on reducing compliances, providing tax certainty, and reducing litigations. However, it has clarified that goods and services (GST) matters are not examined as part of the Budget, as they are to be decided by the GST Council.

Recommendation related with the Central Excise and Custom Duty could be given, it said.

In the FY21 Budget, 80 exemptions related to Customs duty were withdrawn, while in FY22 Budget, it was proposed to review more than 400 old exemptions through extensive consultations from October 1.

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First Published: Tue, November 02 2021. 14:17 IST
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