Taxpayers build nation, they'll drive demand: FM

The Prime Minister Narendra Modi-led government has sought to respect the taxpayer instead of following a rent-seeking approach, finance minister Nirmala Sitharaman said on Sunday, emphasising that the huge tax relief announced in Saturday's Union Budget was an acknowledgement of the contribution of citizens who pay their fair share towards nation-building, or, as she repeatedly stressed, a manifestation of "respect".

- Rajeev Jayaswal, Ravi Krishnan and Utpal Bhaskar

The headline-grabbing tax cuts were not the only economic catalyst set in motion by the government, but the move could also have the follow-on benefit of driving discretionary spending and drive a consumption-led recovery in the economy, Sitharaman said in an interview with Hindustan Times and Mint a day after she presented the budget. The minister also touched upon the burning issues of a possible global trade war in the wake of US tariffs on key trading partners, simplification of regulatory compliances, boosting capital expenditure, and fraught Centre-state relations over electoral freebies.

But she acknowledged that it was only understandable that the tax changes have attracted so much attention.

"The rate change has happened simultaneously (across earning levels). 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 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 with the rate change, everybody derives benefits," Sitharaman said.

She denied that the income tax restructuring had anything to do with electoral politics, dismissing out of hand a suggestion that it may have been motivated by the forthcoming Delhi election.

"From 2019, or 20, Prime Minister (Narendra) Modi clearly told me to use technology and get the faceless (assessment) going... We want the taxpayer to do his own assessment and make it simpler. We brought in faceless assessment and also 'Vivad Se Vishwas' clearance at that time. We brought in a taxpayers' charter.