Rationalise personal income tax slabs, say states

Tribune News Service

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New Delhi, December 30

Union Finance Minister Nirmala Sitharaman on Thursday chaired pre-Budget consultations with state Finance Ministers. The meeting was also attended by some Chief Ministers and Deputy Chief Ministers, besides senior officers from states and the Centre.

Union Finance Secretary TV Somanathan welcomed the participants and informed them about the importance of this particular consultation meeting, said an official news release.

“Most of the participants thanked the Union Finance Minister for financially supporting their states/UTs during the worst months of the pandemic, by enhancing borrowing limits, providing back-to-back loans to states and through special assistance for capital expenditure.

Key suggestions

• Increased research and development spending
• Infrastructure status for digital services
• Rationalisation of income tax slabs
• Investment in online safety measures
• Incentives to hydrogen storage and fuel cell development

The participants also gave numerous suggestions to the Union Finance Minister for inclusion in the Budget speech. Among the suggestions were increased research and development (R&D) spending, infrastructure status for digital services, rationalisation of income tax slabs, investment in online safety measures and incentives to hydrogen storage and fuel cell development.

On personal income tax, some state Finance Ministers felt the personal income tax slabs saw sharp a jump from 5 per cent to 20 per cent and 30 per cent slabs. Multiple surcharges on some of the slabs jack up the personal income tax rate to over 40 per cent.

Pointing out that the Centre has already reduced corporate tax rates to increase compliance and attract more industry, they felt such an approach could be applied to income tax slabs as well.

GST compensation for another 5 yrs sought

Opposition-ruled states have demanded extension of GST compensation cess from two to five years. They have also sought a higher share from the Union Government for centrally sponsored schemes as the pandemic has impacted their revenue. The GST compensation will end in June next year.