In perhaps the first instance, the finance ministry has kicked off the exercise to formulate the next budget by seeking suggestions on changes in direct and indirect taxes from industry and trade associations.

Finance Minister Nirmala Sitharaman, who had to announce additional measures to stimulate a slowing economy within a month of her maiden budget being approved by Parliament, is due to present the annual budget for the financial year 2020-21 on February 1.

The November 11 circular asked industry and trade associations to give “suggestions for changes in the duty structure, rates and broadening of tax base on both direct and indirect taxes giving economic justification for the same.”

“Your suggestions and views may be supplemented and justified by relevant statistical information about the production, prices, revenue implication of the changes suggested and any other information to support your proposal,” it said.

After her maiden budget on July 5, Sitharaman on September 20 announced a cut in corporate income taxes for domestic companies to 22 per cent from 30 per cent previously. This would bring effective corporate tax rate, including all additional levies, to about 25.2 per cent, for companies which are not receiving any incentives or exemptions.

Subsequent to this, there have been demands for a reduction in income tax rates for individuals as well so as to put more money in the hands of the common man for a consumption-led revival of the economy. India’s economic growth had slipped to a six-year low of 5 per cent in the April-June quarter and the revival may take a few quarters despite announcements to boost real estate and financial sectors.

“As regards direct taxes, while forwarding your proposals, please take into consideration the recent initiatives of the government to reduce corporate tax rates applicable to domestic companies” provided they do not avail of any other tax rebate or concession, the orders said.