INSUBCONTINENT EXCLUSIVE:
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.After her maiden budget on July 5, Ms Sitharaman on September 20
announced a cut in corporate income taxes for domestic companies to 22 per cent from 30 per cent previously
This would bring effective corporate tax rate, including all additional levies, to about 25.2 per cent, for companies which are not
receiving any incentives or exemptions.New manufacturing companies formed after October 1 will enjoy a 15 per cent (effective rate of 17 per
cent) corporate income tax rate, against 25 per cent previously.The move is estimated to result in Rs 1.45 lakh crore in revenue loss for
the government during 2019-20.Subsequent to this, there have been demands for a reduction in income tax rates for individuals as well so as
to put more money in the hands of the common man for a consumption-led revival of the economy
India's economic growth had slipped to a six-year low of 5 per cent in the April-June quarter and the revival may take a few quarters
despite announcements to boost real estate and financial sectors."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.With the GST Council, an umbrella body comprising of central and state
ministers, the final decision-making authority on the goods and services tax (GST), the order said that GST-related requests are not
examined as part of the annual budget.It, however, sought suggestions related to customers and central excise duty.The suggestions have been
sought by November 21."The request for correction of inverted duty structure, if any 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 order said.Get Breaking news, live coverage, and Latest News from India and around the world on
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