The finance ministry is all set to formulate the latest Budget 2020 with suggestions on changes in direct and indirect taxes from industry and trade associations.
Finance Minister Nirmala Sitharaman will be presenting the Budget 2020 on 1st February 2021. The minister announced several measures to stimulate a slowing Indian economy within a month of her Budget for the fiscal year 2020-21 being approved by the Parliament.
The Finance Ministry’s department of revenue put out circular seeking suggestions for changes in income tax rates for individuals, corporates as well as for indirect taxes like excise duty & customs duty, according to reports.
The circular issued on 11th November asked industry and trade associations to give “suggestions” for renovations in the “duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same.”
Will it revive the Indian economy?
Sitharaman announced corporate tax cuts after presenting the Union Budget 2019-20 on 5th July. The reduction in corporate tax brought down the effective rate to around 25.2% for companies not receiving any incentives or exemptions.
Some of the other benefits announced by FM Sitharaman during the GST Council Meet held in Goa include a 15% corporate tax rate (earlier 25%) for manufacturing companies formed after 1st October. The move is predicted to result in Rs 1.45 lakh crore revenue loss for the government.
Following this, there have also been demands to reduce the income tax rate for individuals as well as to help put more money in the hands of a common man for the consumption-led revival of our Indian economy. The Indian economic growth slipped down to a six-year low of 5% in the April June quarter. It is believed that the revival might take a few quarters to level up despite having made announcements to boost the real estate and financial sectors.