With the annual budget round the corner, a flat tax rate without exemptions, new slabs for those earning higher incomes, cuts in personal income tax in line with those in corporate tax are some of the possible proposals that are being examined. Actually the government is eying ways of boosting consumption and reviving growth.

Union finance ministry will present arguments for and against these suggestions before a decision is taken at the highest level. The budget will be presented in February. Every option is being examined in this regard. Any such move needs to be examined in the context of gains it can bring to the overall economy vis-a-vis the cost it entails.

Alternative to income tax cuts is putting more money in the hands of the people directly through schemes like PM-KISAN or enhancing the spending on infrastructure. Any possible change in the structure will only benefit the 3 crore individuals who pay income tax but the cost to the exchequer needs to be balanced with benefits by way of a consumption boost.

On the other hand infrastructure sector spending has a multiplier effect. The government has already given away Rs 1.45 lakh crore through corporate tax cuts, but that’s seen as part of broader direct tax reform aimed at attracting investments. But it sparked calls for cuts in personal income tax, since there were no reliefs in this regard in the last budget.