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Jobs confidence, not tax cuts, will push consumption spends:DBS

The government had last month announced a ten percentage point cut in corporate taxes, to get Indian levies at par with others, to spur investments.

Jobs confidence
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Published : Oct 30, 2019, 3:16 PM IST

Mumbai: Amid speculation of an income tax cut, Singaporean bank DBS on Tuesday said confidence on the jobs front is necessary to achieve the move's long-term objective of pushing consumption spending.

The government had last month announced a ten percentage point cut in corporate taxes, to get Indian levies at par with others, to spur investments.

With an eye on pushing up the sagging personal consumption, which is blamed as one of the key culprits for economic growth sliding to a six-year low, the government is mulling to cut the income tax, according to reports.

"Short-term fillip to consumption spending is likely, while a sustained improvement will require confidence in employment prospects and a sustained push towards raising job creation," house economists at the bank wrote.

It added that while lower tax outgoes lead to jumping in discretionary spend on white goods and travel, but will not lead to a jump in high-value spending in sectors such as real estate, which is also among those hits.

A recent consumer confidence survey undertaken by RBI also leads to a "sombre reading", it said, pointing out that as the current and future expectations index extended the decline in September.

Meanwhile, the economists also welcomed the divestment measures undertaken by the government in order to make up for the revenue shortfall which may occur because of the corporate tax cuts.

They also said that the actual revenue shortfall can turn out to be lower than the projected Rs 1.45 lakh crore because firms are not embracing the newer system.

Read more: PFRDA allows OCI to enrol in pension scheme

Mumbai: Amid speculation of an income tax cut, Singaporean bank DBS on Tuesday said confidence on the jobs front is necessary to achieve the move's long-term objective of pushing consumption spending.

The government had last month announced a ten percentage point cut in corporate taxes, to get Indian levies at par with others, to spur investments.

With an eye on pushing up the sagging personal consumption, which is blamed as one of the key culprits for economic growth sliding to a six-year low, the government is mulling to cut the income tax, according to reports.

"Short-term fillip to consumption spending is likely, while a sustained improvement will require confidence in employment prospects and a sustained push towards raising job creation," house economists at the bank wrote.

It added that while lower tax outgoes lead to jumping in discretionary spend on white goods and travel, but will not lead to a jump in high-value spending in sectors such as real estate, which is also among those hits.

A recent consumer confidence survey undertaken by RBI also leads to a "sombre reading", it said, pointing out that as the current and future expectations index extended the decline in September.

Meanwhile, the economists also welcomed the divestment measures undertaken by the government in order to make up for the revenue shortfall which may occur because of the corporate tax cuts.

They also said that the actual revenue shortfall can turn out to be lower than the projected Rs 1.45 lakh crore because firms are not embracing the newer system.

Read more: PFRDA allows OCI to enrol in pension scheme

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New Delhi, Oct 29 (IANS) In a move that could allow firms to settle old cases related to excise and service tax, the Finance Ministry on Tuesday clarified that taxpayers could avail the benefits of Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 (SVLDRS) provided they withdraw appeals filed after June this year.



"...It is stated that such cases are not covered per se. However, if a taxpayer withdraws the appeal and furnishes the undertaking to the department in terms of para 2 (viii) of Circular No. 1072/05/2019-CX dated September 25, 2019, they can file declaration under the scheme," the circular issued by the Central Board of Indirect Taxes and Customs (CBIC) said.



Responding to queries from filed formations and trade, the CBIC circular also said that in cases where the final audit report (FAR) has been issued on or before June 30, the taxpayers would also be eligible for relief under SVLDRS as the tax demand has been quantified.



Rajat Mohan, Senior Partner, AMRG & Associates, said that quite a lot of taxpayers are expected to benefit from the clarification.



The Sabka Vishwas Legacy Dispute Resolution Scheme, 2019 announced in the budget seeks to unlock over Rs 3.75 lakh crore involved in pending cases related to excise duty and service tax. The resolution-cum-amnesty scheme offers relief varying from 40 per cent to 70 per cent of the tax dues for cases other than voluntary disclosure cases, depending on the amount of tax dues involved.


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