New Delhi: In perhaps the first instance, the finance ministry has kicked off the exercise to formulate the next budget by seeking suggestions on changes in direct and indirect taxes from industry and trade associations.
Finance Minister Nirmala Sitharaman, who had to announce additional measures to stimulate a slowing economy within a month of her maiden budget being approved by Parliament, is due to present the annual budget for the financial year 2020-21 on February 1.
While the ministry holds pre-budget consultations with representatives of different sectors and stakeholders, the Department of Revenue in the finance ministry perhaps for the first time put out circular seeking suggestions for changes in income tax rates for both individuals and corporates as well as in indirect taxes such as excise and customs duty.
The November 11 circular asked industry and trade associations to give "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."
"Your suggestions and views may be supplemented and justified by relevant statistical information about the production, prices, revenue implication of the changes suggested and any other information to support your proposal," it said.
"As regards direct taxes, while forwarding your proposals, please take into consideration the recent initiatives of the government to reduce corporate tax rates applicable to domestic companies" provided they do not avail of any other tax rebate or concession, the orders said.
"The government policy with reference to direct taxes in the medium term is to phase out tax incentives, deductions, and exemptions while simultaneously rationalising the rates of tax.
It would be also desirable that while forwarding the suggestions/ recommendations, positive externalities arising out of the said recommendations and their quantification are also indicated," it said.