New Delhi: Finance Minister Nirmala Sitharaman on Saturday said the government is working on more steps, including rationalisation of personal income tax rates, to revive the sagging economy. GDP growth slowed down to more than six-year low of 4.5 per cent in the second quarter of the current fiscal from 5 per cent recorded in the first quarter.
The government has taken several measures during August and September to boost the economy, she said at the HT Leadership Summit. Besides, she said, the public sector banks have disbursed nearly Rs 5 lakh crore without compromising on prudential norms in the last two months to boost consumption in the hinterland. "So there are ways in which for giving stimulus for consumption. We are adopting a direct method and also the method through which we are spending on infrastructure, whose spillover can go to core industries labour and so on," she said.
Asked if there could be more measures announced to bolster economic activity, she said, "If I say yes, it will be when and if I say yes it's also going to be back to me saying are you not too close to the budget. So I don't want to say yes although I am wishing I can say. At the same time, I will not say no, because we are working on more."
When asked if the government is considering rationalisation of the personal income tax rate for putting more money in the hands of people, the Finance Minister said, "One among many things that we are thinking of." Following the reduction in corporate tax in September, there has been a growing demand for a slash in the personal income tax to buttress consumption.
In the biggest reduction in 28 years, the government in September slashed corporate tax rates up to 10 percentage points as it looked to pull the economy out of a six-year low growth with a Rs 1.45 lakh crore tax break.
Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.
Assuring that there will be no harassment of taxpayers, Sitharaman said the intent of the government is to further simplify taxation systems including removal of exemption. Citing the example of corporate tax, she said, "From now on, they're moving towards a greater simplified and exemption free. Therefore, has harassment-free therefore subjective interpretation free taxation regime."