All eyes on Nirmala Sitharaman's second budget

New Delhi: The common man has his eyes set on Finance Minister Nirmala Sitharaman's second Budget next month for relief in income tax, but an economic slowdown and a sharp reduction in corporate tax rates hint that she has very little flexibility to dole out a big largesse. Facing flak for not doing enough to revive a slowing economy in her maiden Budget presented on July 5, 2019, Sitharaman in September sprang a surprise by cutting tax paid by companies on profits they earn to their lowest.

This dented the Centre's tax kitty by as much as Rs 1.45 lakh crore. Alongside, the Goods and Services Tax (GST) rates were lowered many times in 2019 on several items including housing, electric vehicle, hotel accommodation, diamond job work, and outdoor catering.

The twin impact of tax rate cuts and a slowdown in collections due to shrinking consumption in a sagging economy may reflect in unachieved revenue targets. Unmindful of this, the common man expects the Modi-2.0 government to dole out some relief to them as well and the key to that holds in Sitharaman's Budget for 2020-21 to be presented on February 1.

Four meetings of GST Council headed by the finance minister were held in 2019 with the last one in December amid a shortfall in revenue collection due to the economic slowdown. The GDP growth rate hit over a 6-year low of 4.5 per cent in the second quarter forcing the government to take various measures to boost the economy.