The
government is unlikely to offer any major relief on personal income taxes in
the 2016-17 budget due to lack of fiscal space, senior officials have said.
Discussions
on the crucial budget, which will be unveiled in February, are under way and
the numbers are being worked on. But a tight fiscal situation may prevent the
government from being populist at any level. "The room on the fiscal front
is very limited. Therefore, it is unlikely that there will be any major
concessions on the personal income tax side," a government official, who
did not wish to be identified, told TOI, adding that some relief may be in
store for taxpayers.But he did not elaborate.
The
government is faced with a very challenging fiscal situation in the current
financial year as well as in 201617. Several factors have narrowed the fiscal
space. The first is the impact from the rollout of the 7th Pay Commission
recommendations. In November, the Pay panel had recommended an increase in pay
and allowances of 23.6%, a 24% rise in pensions and onerank-one-pension for
central government employees and paramilitary personnel.
These
changes are estimated to cost over Rs 1lakh crore to the government in 2016-17,
according to finance ministry estimates. The government is examining the
proposals and they are likely to be implemented soon. While low global crude
oil prices have provided much needed breathing space, the possibility of an
increase in prices next year will prompt the government to be cautious.
The
economy , which has shown signs of a rebound, needs support through public
nvestment as private investments have not yet picked up o the desired level.
The midyear review of the economy ,a half-yearly report card on the state of
the economy , has backed appropriate fiscal and monetary policies to boost
public investment. The government has already signal ed its strong commitment
to stick to the fiscal deficit target and this is likely to make he budget a
tight rope walk.
In
his 2015-16 budget, finance minister Arun Jaitley had extended a string of
benefits to middle class taxpayers, including raising the limit of deduction on
health insurance premium from Rs 15,000 to Rs 25,000 and for senior citizens
the limit was hiked to Rs 30,000 from the existing Rs 20,000. Jaitley had
promised to do more for individual taxpayers. "As and when my fiscal
capacity improves, individual taxpayers will have a lot to look forward
to," he had said in his budget speech.
.The
FM had unveiled the plan to reduce the rate of corporate tax from 30% to 25%
over the next 4 years to boost investment, growth and jobs.He had also called
for rationalization and removal of various kinds of tax exemptions and incentives
for corporate taxpayers, which account for a large number of tax disputes.
Source:-The
Economic Times
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