Personal tax reform on cards
India plans to take more steps to boost consumer demand, including simplifying personal taxes and injecting liquidity through banks, a top government economic adviser said on Friday, in a bid to raise economic growth from six-year lows.
Krishnamurthy Subramanian, chief economic adviser at the finance ministry, said the government had slashed corporate taxes to attract investment and was looking for ways to boost consumer demand to support that investment.
“In the short run, we are taking steps to increase consumption so that anticipating that consumption, investment also goes up,” he told Reuters in an interview.
One of the measures on the table is aimed at easing personal taxation and making the whole tax administration simpler. The government is also considering the report of a task force to bring India’s six-decades-old tax legislation more in line with those of other countries.
Subramanian said the government planned to make public the recommendations of the task force. “The direct tax code task force has submitted its report,” he said, adding that the steps that have already been taken to streamline the tax administration are likely to help in improving tax buoyancy.
Last month, finance minister Nirmala Sitharaman cut corporate tax rates, raising hopes that the government might consider similar cuts in personal taxes.