To widen the tax base and tax to GDP ratio, Industry body PHDCCI on Wednesday suggested capping the personal income tax rates at 15% with no exemptions. In a pre-budget interaction with revenue secretary Tarun Bajaj, the industry body also suggested that the corporate tax rate be halved to 15% for MSME firms working as proprietorship/partnerships.
Reduction of PIT rate will enhance the personal disposable income of the individuals, who could contribute to refueling consumption, the Chamber said. Currently, PIT rate varies from 5% to 30% depending on income slabs (with or without exemptions).
“It will be hassle free for the individuals to pay the taxes as it will reduce the paper work significantly and increase the tax base in the economy,” PHDCCI said. The industry body also suggested rationalisation of the GST rates into three major slabs of 5%, 10% and 15% along with a few sin goods in the slab of 28%. The items in category of 12% rate should be reduced to 10% and items in the category of 18% rate should be reduced to 15% and the items in 0 and 5% category should be kept as it is. There should be minimum items in the category of Sin Goods which is rated @28%. The GST Council, headed by Union finance minister Nirmala Sitharaman, takes decisions with regard to GST rate changes.