Finance Minister Nirmala Sitharaman kicked off consultations for the Union Budget of 2023-24 on Monday, with industry captains seeking measures to revive domestic demand and create jobs as an antidote to the headwinds from slowing global economic growth.
Apart from a reduction in the income tax burden for households, industry captains also urged the government to bring petroleum products, ATF, natural gas and electricity into the GST regime, reduce import duties and expand the scope of tax rebates granted to exporters.
“At this crucial juncture of geo-political uncertainties, high inflation and slowing world economic growth, calibrated steps to enhance domestic sources of growth would be crucial to maintain a steady economic growth trajectory,” PHD Chamber of Commerce and Industry president Saket Dalmia conveyed to top finance ministry officials at the meeting.
The Confederation of Indian Industry (CII) has suggested significantly lowering the income tax slab rates for individuals earning upto ₹20 lakh, arguing that the ‘brunt of inflation falls on taxpayers in the lower and middle-income group’.
“While the cost of living has increased, there is no respite in the income tax liability which has remained constant squeezing these taxpayers from both ends,” CII noted, and flagged the widened differential between personal and corporate tax rates as a cause for concern.
“The highest marginal rate for individuals has now gone up to 42.74% (highest slab) against the normal Corporate Tax Rate of 25.17%. The huge gap in the tax rates as mentioned between individual and corporate tax rates is leading to several structuring decisions being adopted in favour of corporate model (for example, proprietorship business moving to company format),” CII pointed out in its memorandum.
Over the next week, Ms. Sitharaman will engage with stakeholders from different sectors to seek ideas and inputs for what is expected to be the last full Budget before the Lok Sabha polls in 2024.
While Monday’s meetings were focused on issues related to industry, infrastructure and climate change’, subsequent parleys will look at agriculture, financial sector and capital markets, services and trade, social sectors, along with interactions with trade union leaders and economists.