Mumbai, October 30: The government has ruled out a reduction in personal income tax, including in the forthcoming Budget. According to a Times of India report, the government's decision to cut the corporate tax rate to 15 per cent for new companies in September had stirred the speculation about a reduction in personal income tax (PIT).
In the last Budget, it was raised to over 42 percent for high net worth individuals. The committee on Income tax has advocated a reduction in rates. According to the government sources quoted in the report, the government has been steadily working to increase social security and reduce the tax burden for the lower-income groups. The sources have further cited examples of higher rates in many countries. PM Narendra Modi, Nirmala Sitharaman Mull Tax Revision to Revive Economic Slowdown, Boost Forex Ahead of Budget 2021: Report.
The critics have argued that in countries with higher tax rates, people have access to public healthcare and education, apart from pension and unemployment allowances. Indian government sources argued by saying that additional payment is required for social security benefits and the better-off sections, in any case, do not avail of the benefits. The argument for lowering PIT was weak because several exemptions were available which helped to reduce the actual incidence.