India Inc is banking on the budget to see a reduction in personal income tax to revive the sagging consumption demand after getting the biggest tax break by way of a steep reduction in corporate tax rates, says a pre-budget survey.
Finance Minister Nirmala Sitharaman will increase the income tax exemption limit from Rs 2.5 lakh per annum currently, majority of respondents surveyed by tax consultancy firm KPMG opined.
The majority of respondents also feel that the government in the forthcoming Budget to be unveiled on February 1 will increase the standard deduction and give more incentives for housing loans.
What more the advance estimate last week has pegged the full-year real GDP growth at 5% while the nominal GDP growth at a 48-year low of 7.5%, down from the budget estimate of 13%.
Also, most of the old-generation companies have decided to draw from the existing incentives and not to switch to the new tax regime.
However, in the pre-budget survey involving 215 companies by KPMG India this month, more than half of the respondents plan to opt for the lower tax regime of 22% by giving up available incentives from next fiscal.
A majority of respondents also believe that the tax rate for foreign companies should also be reduced in light of tax cuts for domestic companies. A further stimulus by way of personal tax cuts is also anticipated.
“Majority anticipate the basic exemption limit of Rs 2.5 lakh for individuals will be increased. They also expect an increase in the income limit at which the maximum marginal rate of 30% kicks in. If implemented, this can help spur consumer demand by complementing the interest rate cuts delivered since last year,” says the survey.