Mumbai: Former Finance Minister P Chidambaram on Monday strongly favoured a downward change in the direct tax rates that came into effect in 1997, The Economic Times quoted him as saying in a series of tweets.
He said that it is possible to lower direct tax for the first bracket over course of time. The first bracket of tax could be defined as tax levied to the income of over Rs 500,000.
Presently, government levies a 10 per cent tax on the income under the bracket.
Chidambaram has advanced the idea as according to him the Goods & Services Tax regime would trigger an income boost.
“I hope Urjit Patel, the Reserve Bank of India governor, doesn't remain a silent spectator when such an event unfolds,” Chidambaram said.
Chidambaram also believes current situation also makes for a strong case for a rate cut. “There is a case for the RBI to lower interest rates right now, MPC must decide quantum,” he said. In a developing economy, the answer is not to suppress demand, he added.
