'Can't predict what will happen with US tariffs, we need to be watchful'

In a wide-ranging interview with Hindustan Times and Mint, finance minister Nirmala Sitharaman speaks about the Union Budget and its impact on the economy, new American tariffs on China, Canada and Mexico, simplification of regulatory compliances, boosting capital expenditure, and fraught Centre-state relations over electoral freebies, among other issues. Edited excerpts:

- Rajeev Jayaswal, Ravi Krishnan and Utpal Bhaskar

You have presented some substantive issues in the budget, but the minute you say something like personal income tax cut, that grabs all the headlines.

Yes, that is one, and also see normally, tax relief will not be this range, and will also not be simultaneously across the board. You were at two (lakh rupees starting tax slab), then you'll raise it to 2.5 or you were at five (lakh), you will raise it to seven (lakh). Now, from seven (lakh), I am taking it to 12. So that's a big deal.

And it will also benefit those who are earning ₹25 lakh.

Yes, because the rate change has happened simultaneously. So as a result, you find that the benefit is accruing to every income holder, irrespective of the amount that he earns.

Everybody gets benefit.

Other than that, those IT who have been given the rebate, get the clean knockout no tax to be paid. So we targeted the group with rebate, and also because of the rate change, everybody derives benefits.

What was the motivation for the personal income tax cut? This is a demand every year, but this time you have responded...

From 2019, or 2020, Prime Minister (Narendra) Modi clearly told me to "use technology and get the faceless (assessment) going". We want to have trust in the taxpayers. We don't want any rentseeking happening. We also want the taxpayer to do his own assessment and make it simpler. We brought in faceless assessment. We also brought in 'Vivad Se Vishwas' clearance at that time. We brought in a taxpayers charter. We also used to issue certificates to prompt taxpayers, regular taxpayers. So, the attempt was to tell the taxpayer that we respect his contribution and we continuously recognise that contribution and also that we respect him. And this is true from 2019.