Finance Minister Nirmala Sitharaman refused to answer a question on whether the government is planning to give personal income tax relief to individuals amid speculation that Diwali may spring surprises for the middle-income group.
“Can’t say anything on personal income tax cut now,” Sitharaman told reporters at a media briefing after the release of the World Bank's Ease of Doing Business report.
Officials said that the government was serious about handing out income tax relief but it could be possible only in the next Budget since the revenue position of the government this year was not so robust.
DH has reported that any income tax cut might come only as part of next year’s Union Budget.
The government is working on reducing the personal income tax slabs as well as the rates to keep money in the hands of salaried individuals as it attempts to revive consumption in a slowing economy.
The Direct Tax Code task force has sought a 10% income tax rate for individuals earning Rs 5-10 lakh per year in place of the current 20%. It has accordingly sought a reduction in the upper slabs and a cap of 35% on incomes above Rs 2 crore.
Besides, the task force has recommended doing away with surcharges, exemptions and cess.
The government is working on the suggestions but a revenue shortfall from direct and indirect taxes may not leave much space for any direct tax cut this year, the official said.
The expectations for a cut in personal income tax rose after Finance Minister Sitharaman announced a steep corporate tax rate cut to 22% from an earlier 30%.