CII proposes slashing of rates in tax in the upcoming budget

Guwahati: Confederation of Indian Industry (CII), an industry body, has suggested lowering personal income tax rates in comparison to a 28 percent drop in the highest Goods and Services Tax (GST) rate to boost demand.

The announcement was made a day ahead of Finance Minister Nirmala Sitharaman's customary pre-budget meeting with stakeholders. 5.83 crore people who filed income tax returns for 2022–2023 and are subject to the income tax system are anticipated to profit from the ruling.

The CII also urged lowering the GST slab on consumer durables by 28%. If approved, this will boost the amount of available cash for people who pay direct taxes. Moreover, it would result in lower costs for goods with high GST rates.

The confederation requests that GST be made legal by the government. The body noted that the GST statute already has enough criminal penalties for deterrence against tax avoidance.

It also suggested that the prosecution provisions' applicability not be determined by the overall amount of tax avoided. However, it must be founded on the actual desire to avoid paying taxes. Experts, however, remain pessimistic about the prospect of the CII's recommendation being implemented.

According to the Department of Revenue, as of November 17 and September 17 of this year, direct tax net revenues for the Financial Year 2022–23 were Rs 7 lakh crore. This is an increase of 23% as compared to Rs 5.68 lakh crore over the same period of Financial Year 2021–22. In a similar manner, the GST Council will deliberate on the request for a decrease in the highest GST slab.

The government may cut the number of tax slabs, according to Revenue Secretary Tarun Bajaj's statement from July. However, the highest GST rate of 28 percent would still apply to luxury and sinful items including wine, cigarettes, candles, narcotics, soft drinks, fast food, coffee, and others.

The amount of GST collected in October was Rs 1.51 lakh crore, which is the second-highest amount since July 2017.

The CII has suggested streamlining fuel and fertiliser subsidies to reduce non-priority spending. The government should increase expenditure from the present level of 2.9 percent of GDP to 3.3-3.4 percent in the upcoming fiscal year 2023–2024, it was also said. It also suggested that government capital spending increase to 3.8-3.9 percent by 2025.

Furthermore, it suggested accelerating the privatisation of Public Sector Entities in the upcoming fiscal year. In order to reach the divestiture objectives, this is suggested.

The CII also suggested expanding investments in green infrastructure, increasing spending on rural infrastructure, strengthening the corporate bond market, and creating a path to reduce the budget deficit to 6% of GDP by the end of the 2024 financial year.

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