Home Supporting structure Finmin seeks industry input on pre-budget tax rates and exemptions

Finmin seeks industry input on pre-budget tax rates and exemptions

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The finance ministry stressed, ahead of the Union budget, that tax exemptions will be phased out and tax rates will be streamlined in the medium term, while seeking suggestions from stakeholders in trade and industry. .

They were invited to submit their recommendations by November 15, on policy changes in indirect and direct taxes giving an economic rationale.

“Send your suggestions for changes in the structure of duties, rates and broadening of the tax base on direct and indirect taxes giving an economic rationale for the same,” the finance ministry said in a letter. to the Association of Commerce and Industries.

The Union’s budget for the financial year 2023 is expected to be presented on February 1.

The letter further stated: “As can be seen, the government’s medium-term direct tax policy is to phase out tax incentives, deductions and exemptions while simultaneously streamlining tax rates.”

Currently, more than 100 exemptions and deductions of a different nature are provided for in the Income Tax Act.

“We will review and rationalize the remaining exemptions and deductions in the coming years with a view to further simplifying the tax system and lowering the tax rate,” Finance Minister Nirmala Sitharaman said in her budget speech. Added that about 70 of them had been withdrawn in the new simplified regime.

The ministry asked commercial and industrial bodies to supplement and justify their suggestions and views with relevant statistical information on production, prices, revenue implications of changes and any other supporting information.

The letter also dwelled on the reverse tariff structure, asserting that the request for a correction to the reverse tariff structure for a product should necessarily be supported by added value at every stage of the product’s manufacture.

“It would not be possible to consider suggestions which are not clearly explained or which are not supported by adequate justification / statistics.” the ministry noted.

The ministry also asked for suggestions on compliance reduction, tax certainty and litigation reduction.

However, he clarified that goods and services (GST) issues are not considered as part of the annual budget, as they must be decided by the GST Council.

A recommendation on central excise and tariffs could be given, he said.

Notably, in the 2021 budget, 80 tariff exemptions were withdrawn, while in the 2021-22 budget, it was proposed to review over 400 old exemptions through extensive consultations from October 1, 2021.

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