Indian FM hints income tax cut

Indian Finance Minister Nirmala Sitharaman indicated that the government may soon relax the personal income tax burden to provide relief to individuals and boost consumption by putting more money in the hands of people. 

The minister also emphasized on ensuring credibility in government data, while talking at the Hindustan Times Leadership Summit 2019 in New Delhi on Saturday, reports livemint.

A cut in personal income tax 
Sitharaman said, "(A cut in personal income tax) One among the many things we are looking at."

The relief, if provided, will come amid a downturn in the economy led by tepid demand and sluggish private investment.

When asked how soon there will be a relief on personal income tax, the minister said "wait for the Budget".

The Union Budget for fiscal 2021 will be presented in February.

India's economy grew at 4.5% July-September, the slowest pace in six years. 

Though the Centre has announced a slew of measures over the last four months to revive growth, the steps are yet to yield the desired results.

In September, the finance ministry slashed corporate tax rate for new and domestic manufacturing companies to encourage businesses to invest more amid a 
slowdown. For companies that do no avail any tax incentive, the rate will be 22% from 30% earlier, while the effective corporate tax rate after surcharge will be 25.17%, including cess and surcharges.

The corporate tax rate cut will cost the government ₹1.45 lakh crore and is expected to widen fiscal deficit, ratings agencies and experts have said.

A cut in personal income taxes would put more pressure on government's finances, especially as tax collections have remained tepid.

The Centre overshot its annual fiscal deficit target at 102.4% and exhausted 112.5% of the revenue deficit target during April-October.

Sitharaman also said the government is taking baby steps towards creating a simplified taxation structure that will ensure assessees are not harassed. The government is also moving towards an exemption-free tax regime, she added.

Credibility in government data
Sitharaman said the government holds back data only in cases of issues in reports from surveys on the ground.

"We need to assure people who need the data and lots of people need the data... Even the government needs its own data. But the fact is when sometimes something genuine has gone wrong in the ground, and therefore, survey results have been held back," said the minister. 

The government is fairly seized of the ongoing debate about data and its credibility, the minister added.

Sitharaman's comments follow a leaked National Statistics Office report on consumer spending, published in newspaper Business Standard, which was debunked by the government.

According to the Business Standard report, the average monthly spending by an individual fell to ₹1,446 in 2017-18 from ₹1,501 in 2011-12, down 3.7%.

"The intention is to make sure that any kind of inappropriate methodology, which has come into the data will have to be addressed. But that is not to deny data is something which all of us so take as position," the minister said.

In another instance, in November, the ministry of statistics and program implementation (MOSPI) decided not to release the 75th round of the Consumer Expenditure Survey 2017-18, citing discrepancies and divergence from other administrative data.

The ministry had also said the advisory committee on National Accounts Statistics rejected a proposal to shift the gross domestic product, or GDP, base year to 2017-18 from 2011-12, as the proposed year was not "appropriate".