New Delhi: The finance ministry has kicked off the exercise to formulate the next budget by seeking suggestions on changes in direct and indirect taxes from industry and trade associations.
Finance Minister Nirmala Sitharaman, who had to announce additional measures to stimulate a slowing economy within a month of her maiden budget being approved by Parliament, is due to present the annual budget February 1 for the financial year 2020-21.
While the ministry holds pre-budget consultations with representatives of different sectors and stakeholders, the Department of Revenue in the Finance Ministry put out a letter seeking suggestions for changes in income tax rates for both individuals and corporates as well as in indirect taxes such as excise and customs duty.
The November 11 letter asked industry and trade associations to give ‘suggestions for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same’.
“Your suggestions and views may be supplemented and justified by relevant statistical information about the production, prices, revenue implication of the changes suggested and any other information to support your proposal,” the Department of Revenue said in the letter.
After her maiden budget July 5, Nirmala Sitharaman announced September 20 a cut in corporate income taxes for domestic companies to 22 per cent from 30 per cent previously. This would bring effective corporate tax rate, including all additional levies, to about 25.2 per cent, for companies which are not receiving any incentives or exemptions.
New manufacturing companies formed after October 1 will enjoy a 15 per cent (effective rate of 17 per cent) corporate income tax rate, against 25 per cent previously.
The move is estimated to result in Rs 1.45 lakh crore in revenue loss for the government during 2019-20.
“As regards direct taxes, while forwarding your proposals, please take into consideration the recent initiatives of the government to reduce corporate tax rates applicable to domestic companies provided they do not avail of any other tax rebate or concession,” the letter said.
PTI