Home / Budget / News /  Cut income tax to revive demand: CII

NEW DELHI : The Confederation of Indian Industry (CII) has sought an income tax cut to support a demand revival, in the run-up to the Union Budget due to be presented in February.The recommendation by the industry lobby coincides with sombre growth forecasts by prominent economic groups citing Russia’s invasion of Ukraine and China’s economic slowdown.

To spur exports, CII has recommended covering all export products under the Remission of Duties and Taxes on Export Products (RoDTEP) scheme which offers refunds against various embedded taxes. On Saturday, the Centre decided to scrap the export duty on iron ore and several steel products after data showed merchandise exports fell over 16%.

“For raising consumption demand, CII has suggested putting in place policies such as rationalizing income tax slabs and rates for individuals, reducing the 28% GST rate on select consumer durables, and expediting rural infrastructure projects for facilitating employment generation in the hinterland," the lobby group said.

The CII has also recommended raising capital spending to 3.3-3.4% of GDP in FY24 from 2.9% currently. The last Union budget had seen a record increase in capital expenditure to 7.5 trillion, up 35.4% from the previous financial year. Mint has reported that the number could hit 10 trillion buoyed by improved tax collections.

“The sunset date for commencing manufacture under Section 115BAB of the income tax Act should be extended from current 31 March 2024 till 31 March 2025. This would encourage more investment in the manufacturing sector and exports," CII said.

The Budget should also improve ease of paying taxes by promoting and ensuring the swift functioning of important dispute resolution mechanisms like faceless appeals, Advance Pricing Agreement (APA) mechanism, Board for Advance Ruling (BAR) and Dispute Resolution Scheme (DRS), it added.

CII further recommended simplification in the procedures on withholding taxes, return filing, assessments and the appellate mechanism, which can help reduce tax litigation and encourage ease of paying taxes.

“The GST appellate Tribunal and National Authority of Advance Ruling should be set up on priority as the taxpayers are facing problems in filing appeals with High courts, especially for rejection of refunds. Further, the GST amnesty scheme should be introduced to cover procedural and minor issues initially faced by taxpayers due to a lack of understanding," CII said.

As the GST law already contains adequate penal provisions for deterrence against evasion of taxes, CII has suggested decriminalization of GST law. Also, the applicability of prosecution provisions should not be based on the absolute amount of tax evasion but intent to evade taxes, it added.

“Government should also consider laying down a roadmap for rationalizing the domestic TDS rates structure by having only two or three categories of payments and a small ‘negative list’ of payments which will not be liable to TDS," Rajiv Memani, chairman taxation committee, CII said.

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