Even as the economy sees a slowdown, it’s time for the government to boost consumption by cutting tax rates for individuals, a veteran fund manager said. The government should consider reducing the highest tax slab for individuals and further streamline GST rates to boost investment and improve the collection, A Balasubramanian, MD, and CEO of Aditya Birla Sun Life AMC told The Indian Express in an interview. The lowering of tax rates may negatively impact fiscal in the short term, huge gains can be generated for the future, Balasubramanian added. “GST on mutual fund distribution should be brought to five per cent if not zero, given the importance of increasing the penetration of mutual fund industry,” he also said.
The economy recorded a dismal performance in the first quarter of the ongoing fiscal posting a 5 per cent GDP growth rate, both on account of domestic and global factors. Several rating agencies have projected a growth rate below 5 per cent in the second quarter as well. The slowdown has led to a fall in investments over the period, even as the government has announced a slew of economic reforms.GST revenues in November stood at Rs 95,380 crore, up from Rs 91,916 crore in September this year but lower than Rs 1,00,710 crore in October 2018, according to official data released on Friday. Overall GST collections in April-October 2019 increased 3.38 per cent year-on-year.
Meanwhile, the fresh funds for projects fell to a 15 year low in the first half of FY20, a report said. In FY19, the value of new investments was recorded to be lowest in the past five years with the number of fresh projects pegged at Rs 11.9 lakh crore, CARE Ratings said in a study based on CMIE data. It is the fourth consecutive year of such contraction, it added. Weak investment climate and consumption are the key reasons for the investments to fall over the period, the report noted. In addition, lack of funds and slow non-environment clearances have added to the problem.