Ahead of Union Budget, reports have surfaced saying that finance ministry is expected to announce a slew of measures in the forthcoming Union Budget 2020-21. The finance ministry is likely to provide income tax relief to the middle class.
According to Indian Express, a series of discussions have been held within the government to promote economic growth and a reduction in the tax burden is seen as having a direct impact on boosting consumption. An official told the leading daily, that the Finance Ministry is learnt to have firmed up plans under which the tax adjustment is likely to be planned in a manner that the effective tax burden of the middle class effectively comes down by about 10 per cent of their overall tax outgo for the year.
One of the officials told the Indian Express, “We are going through a number of suggestions. One view is to remove all surcharges on middle class and to keep the income tax structure simple. Some tax relief is being thought of, either in the form of an adjustment of tax slabs or the removal of the surcharges.”
The finance ministry is also working on possible measures and an increase in tax incentive for new home purchase could be provided to push home purchase and absorption of unsold inventory.
The ministry is mulling these measures ahead of the Budget for 2020-21, which may be presented by the Finance Minister Nirmala Sitharaman on February 1. The Economic Survey is expected to be announced on January 31.
The government is mulling a restructuring of personal income tax rates to encourage the middle class to spend more in its bid to boost consumption. The finance ministry is currently holding discussions to present concrete proposals in next year's Union Budget.