Economists met FM Arun Jaitley on Monday for a pre-budget consultation on tax proposals, social security measures and ways of mobilizing additional government revenue
New Delhi: Economists on Monday urged finance minister Arun Jaitley to cut the corporate tax rate to make Indian industry globally competitive, and give incentives to infrastructure and small businesses without compromising on the government’s fiscal consolidation road map.
The recommendations made by the economists who met the minister for a pre-budget consultation included tax proposals, social security measures and ways of mobilizing additional revenue.
According to a finance ministry statement, the economists suggested that in case the government falls short of achieving its fiscal goals for the current fiscal year (including a 3.2% fiscal deficit target), the reasons should be explained in the budget. They wanted the forthcoming budget to set out a road map for further tax reforms.
The finance ministry recently set up a task force to draw up a new direct tax code, taking into account global best practices and the economic needs of the country. In addition, the government is in the process of phasing out corporate tax exemptions and reducing the tax rate to make the tax system simple and reduce litigation.
The tax rate for companies with annual revenue less than Rs50 crore a year was reduced to 25% from 30% in the budget for the current fiscal year.
Experts also urged the government to lay down a schedule for convergence of the various goods and services tax (GST) slabs. Jaitley, who chairs the GST Council, has already indicated the federal tax body’s intention to merge the 12% and 18% slabs once revenue streams stabilize. They also sought a more taxpayer-friendly administration.
“It was also suggested that without compromising on macroeconomic stability, more incentives be given for infrastructure investment as well as to small and medium enterprises (SMEs) and construction sectors to make them economically viable," said the finance ministry statement.
The economists also pitched for more remunerative prices for farm produce.
According to Rathin Roy, member, Economic Advisory Council to the Prime Minister, the government is expected to stick to the fiscal deficit target, said news agency PTI.
Levying long-term capital gains tax on equity and disinvestment of state-run companies were suggested as some of the ways to mobilize additional revenue. Among social security measures, the economists wanted higher old age and widow pension.
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