The Confederation of Indian Industry (CII) proposed lowering personal income tax rates a day before Finance Minister Nirmala Sitharaman begins the customary pre-budget meetings with stakeholders in order to boost demand. This could benefit nearly 5.83 crore individuals who are subject to the income tax regime and filed income tax returns (ITRs) for the fiscal year 2022-23.
The CII also proposed lowering the highest GST slab of 28% on consumer durables. If approved, this would not only increase the amount of disposable money in the hands of those who pay direct taxes, but it would also result in price reductions for commodities that attract high GST rates.
The confederation also wants the government to make GST legal. It argued that adequate penal provisions for deterring tax evasion are already built into the GST law. It also suggested that the applicability of prosecution provisions be based on the’real intent’ to evade taxes rather than the total amount of tax evaded.
However, experts are sceptical about the feasibility of implementing the CII’s proposal. According to the Department of Revenue, direct tax net collections in FY 2022-23 (as of 17.09.2022) were Rs 7 lakh crore, up from Rs 5.68 lakh crore in FY 2021-22, representing a 23% increase.
Similarly, the GST Council will decide on the proposal to reduce the highest GST slab. Revenue Secretary Tarun Bajaj stated in July that the government may reduce the number of tax slabs but would keep the top GST slab of 28% for luxury and sin goods. The October GST collection was Rs 1.51 lakh crore, the second highest since July 2017.
To reduce non-priority spending, the CII has proposed rationalising fuel and fertiliser subsidies. It also stated that the government should increase spending from the current 2.9 percent of GDP to 3.3-3.4 percent in fiscal year 2023-24. It also proposed an increase in government capital spending to 3.8-3.9 percent by FY25.