NEW DELHI: The government is unlikely to change tax slabs at least in the current fiscal year, considering the slowdown and fear of below-par tax collection, despite a draft Direct Tax Code submitted to the government which suggests changes.
“There are some bold reforms recommended in the direct tax code but the question is whether the current timing is correct for the implementation. In the present context, the ministry is of the view that tax slabs should remain untouched. The move can be initiated after the economy recovers in the coming view quarters,” a senior official from the finance ministry told TNIE.
The high-level government task force on direct taxes, which was appointed to review the existing 58-year-old IT Act, had submitted the report to Finance Minister Nirmala Sitharaman on August 19. The draft is not yet public and officials have said that it would be made public only after the finance ministry evaluates it properly.
However, a part of it, which is already in circulation, suggests lowering tax rate for corporate and increase the exemption slabs for individuals up to Rs 6.50 lakhs. The panel had highlighted the need to review existing tax brackets, surcharges and implementation of special guidelines for start-ups. However, due the current fear of slowdown, the government is not in the mood to tamper with the tax slabs and is likely to maintain status quo.
Reducing tax slabs had been a long pending demand from India Inc. “At a time when the Indian economy is showing signs of slowdown, it becomes immensely important to initiate measures that boost business and make them more competitive. A business boom by default also creates more jobs, something the economy badly needs now”, said Vivek Jalan, co-chairman, Taxation Committee of Bengal Chamber of Commerce.
Direct tax draft not yet public
The high-level government task force on direct taxes, which was appointed to review the existing 58-year-old Income Tax Act, had submitted the report. The draft is not yet public and officials said that it would be made public only after the ministry evaluates it