Washington: The government will consider a cut in personal income tax on its own merit and will not try to reduce them only to bring a parity with the corporate tax rates, Finance Minister Nirmala Sitharaman said.
"The government has periodically given relief to individual taxpayers. There are several exemptions offered. Now because we want more investment to come into this country, and we have given it to all companies under the companies act, to bring in a parity of sorts and to say (cut) personal income tax, I would rather deal with personal income tax on its own. So personal income tax will be considered for what its merit is."
The minister was replying to the discussion on the Taxation Laws (Amendment) Bill, 2019, in the Lok Sabha which was passed by the lower house today.
The bill seeks to provide domestic companies with a new option to pay tax at the rate of 22%, provided they do not claim certain deductions under the Income Tax Act.
The bill also provides new domestic manufacturing companies, incorporated on or after Oct 1, with an option to pay income tax at 15%, provided they do not claim certain deductions.
She added that many new companies have shown interest in making investments after the tax being slashed to 15% and that the green shoots in investments are visible.
"We have managed to keep the fiscal discipline completely intact and maintained the average figure well under 4%. Let the RE (revised estimates) stage come we will take a call on it," she said while speaking on the fiscal health of the economy.
The cut in corporate tax rate, which will cost the exchequer 1.45 trln rupees, along with a muted growth in goods and services tax revenue has raised concern whether the government will be able to meet its fiscal deficit target of 3.3% of GDP in 2019-20 (Apr-Mar).
Sitharaman said that the direct tax collection in Apr-Nov has increased by 5% on year.
