Does the fiscal stress call for a tax cut?
In view of experts, the sequence in which demonetization and GST were placed, eventually led the whole economy in fiscal stress. Both these changes were made in the economy when it was relatively very weak and when there’s already existing a huge pressure on the sector growth base.
The Finance Minister Nirmala Sitaraman once putting a reference to the economic condition acknowledged of Ministry talks with several sectors to know the causes of stock pilling and growth stress. She also presented facts of the Ministry’s newly fed policies for sector upliftment.
Seeking the movement of the economy and nagging indirect tax collections, the demand for a swipe cut over direct tax now seems an un-practical thought for the coming Budget 2020.
The Budget 2020 is likely to be presented on February 1. The government now requires more funds to raise its initiative as announced for the Modi Government 2.0 including the Ayushman Bharat, PM Awas Yojana, MNREGA, PM- Kisan and various other proposed schemes, which further eradicates for the tax cut possibility for government in the coming year.
Not made even in the last 28 years, the government at recent slashed down the corporate tax rate to 22% where for the manufacturing sector it was put to as low as 15% from 25%.
Last year ample tax benefits were announced for the taxpayers including the one for exemption limit of Rs 5 lakhs and spacing of other deduction limits.
Policy Incentives Announced for Economy Growth
Instead of lowering tax revenue of the government, the Finance Minister sighted for improvements required in the economic policies of the country for which some policies were announced and will also be announced later from time to time. Targeting on ease of doing business and the ease compliance with different regulatory authorities:
- Policy for ‘Faceless assessment of direct taxes as E-Assessment Scheme under Section 143(3A) of the Income-tax Act;
- Policy for ‘Digital verification of documents through DIN (Document Identification Number‘;
- Policy for Compounding of all past offenses(offenses) to reduce pending matters of prosecutions before courts;
- Policies for improving credit outflows of banks (including credit guarantee schemes;
- Export Incentives including
- (RoDTEP), ITC Automation with (FORM GSAT RFD-01), “Origin Management System” for online generation of origin certificates for exporters, etc.
- Building a Special Window for providing last-mile funding to house projects (non-NPA and non-NCLT) & allowing affordable housing to the middle class;
All were notified taking in view the growth expansion of the country.
All in all, the government in its last year budget put more emphasis on the social security aspirations of the taxpayers and on reducing their tax burden. While the current economic stress shall make the authorities think a bit again before putting an additional drop in the tax rate for the individual for the coming financial period.
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