Indian budget likely to cut tax rates for individual taxpayers
The government is likely to trim personal income tax rates and cut the tax on long-term capital gains from equity investments in its next budget, in a bid to spur economic growth, four government officials.
Government officials are also debating whether to offer more help to troubled financial services and whether to increase import duties boost private investments and domestic manufacturing.
“We are discussing tinkering with ... income tax rates so that more money is put in the people’s hands,” a senior government official directly involved in budget discussions told Reuters.
Many groups have been urging the government to cut personal income tax rates to spur demand and lift economic growth, which sank to a six-year low of 4.5 percent in the July-September quarter from 7 percent a year ago.
Prime Minister Narendra Modi earlier this year cut corporate tax rates to 15 percent for new manufacturers and to 22 percent for existing companies, from about 30 percent.
Finance Minister Nirmala Sitharaman is expected to present the budget for 2020/21 fiscal year on February 1. He has promised a budget that will do more to boost growth.
Another government official said a proposal to relax long- term capital gains on stock investments was under consideration, to attract investors.
“There are various suggestions, including completely removing it,” the official said, adding the issue was discussed at the level of the Prime Minister’s office. He said a final decision was still to be taken.
The government might also change import duties on select items to promote domestic manufacturing, a trade ministry official said.
Industry groups have urged the government to withdraw the long-term capital gains tax to encourage retail investment in mutual funds and shares, instead of other assets like gold or real estate.
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