Economy

Simplify, reduce personal income tax: Economists

Leading economists urged Prime Minister Narendra Modi to simplify and reduce personal and corporate taxes in the upcoming Budget, as they called for a unified import duty of about 7 per cent for the manufacturing sector.

“Tax simplification figured quite a lot...on the direct taxation, both corporate and personal income tax on simplifying, reducing exemptions, bringing down tax rate and aligning tax system to make India competitive with international destination,” Niti Aayog Vice Chairman Arvind Panagariya said.

Inverted duty structure

In the meeting, the issue of inverted duty structure, in which import tariffs on intermediates or inputs was higher than the final product, were also raised. “It was suggested that if the tariff is harmonised to a single rate of 7 per cent or so…If all the products are subject to same tariff rate then nobody will have the complain that my component price is higher…The tariffs will be harmonised in a revenue-neutral manner,” Mr. Panagariya said after the meeting.

Currently, India’s average applied tariff for non-agricultural imports from all countries is about 9.5 per cent.

Other Budget-related suggestions included simplification of taxation in the areas of corporate and personal income tax, strategic disinvestment, and listing of CPSEs, increased use of DBT to rationalise subsidy expenditure and better systems for data analytics of tax data to facilitate data-driven tax administration.

Advancing date

During the meeting, Mr. Modi said advancing the date of budget presentation would help getting funds authorised for different sectors at the start of the financial year.

The government is proposing to present the budget for 2017-18 on February 1 instead of the regular date of February 28. Also, there will be no separate railway budget for the next fiscal as the government has decided to merge it with the general budget.

Mr Modi said under the existing budget calendar, the authorisation of expenditure comes with the onset of the monsoon which results in government programmes remaining relatively inactive in the productive pre-monsoon months.

In the meeting, the major themes of discussion were agriculture; jobs, education and skills, and the Budget.

Among measures to meet the stated goal of doubling farmers income by 2022, the economists suggested agriculture marketing reforms, to provide better prices to farmers. “We should give farmers the freedom to market their produce. They should be allowed to sell to private wholesale markets,” Mr. Panagariya said.

Tourism sector

Besides, tourism sector was highlighted as a priority sector where India has should make more investments.

The meeting was attended by the Finance Minister Arun Jaitley, Minister of State for Planning Rao Inderjit Singh, Mr. Panagariya, and senior officers from the Union Government and NITI Aayog.

Economists and experts present at the meeting, included Prof. Pravin Krishna, Prof Sukhpal Singh, Prof Vijay Paul Sharma, Neelkanth Mishra, Surjit Bhalla, Dr. Pulak Ghosh, Dr. Govinda Rao, Madhav Chavan, Dr. N.K. Singh, Vivek Dehejia, Pramath Sinha, Sumit Bose, and T.N. Ninan.

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Printable version | May 8, 2021 9:02:12 PM | https://www.thehindu.com/business/Economy/Simplify-reduce-personal-income-tax-Economists/article16950714.ece

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