Our Motive Was To Honour The Taxpayer

‘We’ll be watchful, but we can’t predict at the moment what will be the effect on us.’ -On Trump’s tariffs on Mexico, Canada and China

- Utpal Bhaskar, Rajeev Jayaswal & Ravi Krishnan

The tax cut announced in the budget was driven primarily by the intent to honour the honest taxpayer, said finance minister Nirmala Sitharaman. In a wide-ranging interview to Mint and HT, she explained the philosophy behind the new Income Tax bill expected to be tabled in Parliament this week, what the government is doing to ensure regulators don’t operate in silos, how the government is trying to diversify export markets and the plan to reach 8% GDP growth to become a developed country by 2047. Edited excerpts.

You have presented some substantive issues in the budget, but the minute you say something like a 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 simultaneous 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 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 benefits. 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 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…