There have been talks of economic slowdown everywhere, creating some tension in the citizens. However, the Prime Minister’s Office (PMO) and top officials of the Finance Ministry are working on coming up with measures and incentive packages to boost the slowing economy. The government has been concerned about the sharp fall in key economic parameters. Alongside, the revenue collections have been diminishing.
The PMO and top officials of the Finance Ministry have been meeting consistently with the Central and state government officials to plan ways to raise the revenue collection. It turns out to be prospective stimulus packages to boost the economy through demand.
Liquidity is no longer a concern and the government has taken care of investors’ issues by reducing the corporate tax rates. This has led to a loss of Rs.1.45 lakh crore. Discussions are on the table to reduce income tax rates excluding exemptions.
With regard to banks, the demand is to offer housing and car loans at lower monthly instalments. Real estate laws and tax structure are to be reviewed to reduce compliance cost for builders; this cost could be passed on to the consumer.
In order to spike up the auto sales, the government is looking forward to introducing some incentives. However, cutting the goods and services tax (GST) on automobiles has posed as a challenge.
Also Read: Slash in personal tax rate to boost the consumption in the economy
The tax cut would possibly add a revenue hit of up to Rs.60,000 crore. Another proposal at hand are raising public investments in infrastructure, especially in rural areas. The proposal includes asking state-run firms to invest in their budgeted expenditure.
The cabinet raised dearness allowance of five million central government employees and 6.5 million retired employees by 5%. The decision was made expecting a rise in consumption during the festive season.
Series of meetings are being held at the PMO and a few of these meetings have been attended by the Finance Minister Nirmala Sitharaman. The PMO also met with senior officials to share the responsibility of GST collection, which had alarmingly dropped in September 2019. This downfall points at the retarding demand for goods and services.
The PMO has been constantly monitoring the growth of the country. It has also instructed state governments to share the responsibility of GST collection. If this fails, the country may face troubles after the compensation period if over in 2022.
For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in
