Income Tax News: Relief for Lowest Slab on Cards? CII Calls for Tax Reduction in Upcoming Budget

Income Tax News: Sanjiv Puri, the recently elected President of the Confederation of Indian Industry (CII), has advocated for income tax reduction for those in the lowest tax bracket due to rising inflation. Speaking to PTI, Puri emphasised how urgently the approaching full Budget for 2024–25 needs to provide financial relief for the lower-income group.

Creating a Platform for Reforms

Puri suggested setting up an institutional framework to encourage agreement between the central and state governments. This platform would play a pivotal role in propelling important reforms concerning land, labour, power, and agriculture.

No Political Roadblocks to Reforms

During the course of Prime Minister Narendra Modi's third term, the CII is still confident that coalition politics won't obstruct the reform agenda. As per the industry body's belief, the robust reform process will be accelerated due to the favourable performance of the Indian economy and the effective implementation of prior policies.

Key Budget Expectations

The CII's budgetary expectations are centered around several key areas:

• Public Capital Expenditure: Continued investment in public infrastructure.
• Fiscal Glidepath Adherence: Maintaining a disciplined fiscal policy.
• Social Infrastructure Investment: Enhancing investment in health, education, and social services.
• Green Fund: Increased funding for environmentally sustainable projects.
• Rural Sector Investment: Boosting investments in rural development.

Tax Simplification and Rationalization

Puri underlined the need for continued simplification in the taxation area. He urged a rationalisation of these rates, pointing out that capital gains taxes differ for various instruments. He also called for the simplification of rates and discussed the practical difficulties related to Tax Deducted at Source (TDS) and the variety of rates.

Puri also suggested a gradual move towards a three-tier customs structure:

• Primary Goods: Lowest tax rates.
• Intermediate Goods: Moderate rates.
• Finished Goods: Higher rates with some exceptions.

Income Tax Exemption Limits

Individuals could only exempt up to Rs 2.5 lakh in income tax under the old tax regime; under the new tax regime, that amount is up to Rs 3 lakh. Puri's advocacy for income tax relief in the lowest slab is a response to the financial burden posed by high inflation.

Optimism for Reform and Rate Cuts

Puri expressed optimism that the reform movement will pick up steam soon. He is still optimistic that food prices would level off with a strong monsoon and believes the RBI will cut the key interest rate in the second half of the current fiscal year, beginning in October.

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