Income tax rate cuts unlikely

Given the lack of fiscal space to reduce income tax and the prevailing higher levies in several countries such as China, the US and the UK, a reduction in personal income tax (including in the forthcoming Budget) is highly implausible. Recently, a committee on income tax, too, had advocated a reduction in rates. However, according to sources conversant with the matter, the government believes that by providing a complete rebate on income up to INR 5 lakh, together with tax benefits on investment and other deductions, an individual can have zero tax liability on an income of up to INR 6.5 lakh.