India Inc expecting budget to lower personal income tax rates

Mumbai: India Inc is banking on the budget to see a reduction in personal income tax to revive the sagging consumption demand after getting the biggest tax break by way of a steep reduction in corporate tax rates, says a pre-budget survey.

Finance Minister Nirmala Sitharaman will increase the income tax exemption limit from Rs 2.5 lakh per annum currently, majority of respondents surveyed by tax consultancy firm KPMG opined.

The majority of respondents also feel that the government in the forthcoming Budget to be unveiled on February 1 will increase the standard deduction and give more incentives for housing loans.

The government had slashed corporate tax rates to 25 per cent for old companies and to 15 per cent for new companies provided they are ready to forego all the existing exemptions. Though the move was hailed by many as a booster dose to revive growth it has belied the expectation as growth has since then fallen to more than six-year low of 4.5 per cent in the September quarter from 5 per cent in the previous quarter.

What more the advance estimate last week has pegged the full-year real GDP growth at 5 per cent while the nominal GDP growth at a 48-year low of 7.5 per cent, down from the budget estimate of 13 per cent. Also, most of the old-generation companies have decided to draw from the existing incentives and not to switch to the new tax regime.