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Govt stares at tax shortfall of Rs 2 lakh crore; room for income tax cut limited

Govt stares at tax shortfall of Rs 2 lakh crore; room for income tax cut limited

Tax collections in the current fiscal may fall short of targets by as much as Rs 2 lakh crore on faltering economy, leaving a very little room for Finance Minister Nirmala Sitharaman for offering any meaningful reduction in personal income tax rates. Sources with direct knowledge of the development said income and corporate tax collections are likely to miss FY2020 targets by as much as Rs 1.5 lakh crore while indirect taxes may fall short by about Rs 50,000 crore on drop in the Goods and Services Tax (GST) in a sluggish economy.

Expectations were that Sitharaman, who had in September last year cut the corporate tax rates to their lowest to boost economic growth, would announce similar sops for individual taxpayers, but lower than expected tax collections and government's missing disinvestment target by a wide margin would limit her largesse.

The exchequer was shaved off Rs 1.45 lakh crore as the government slashed corporate tax rates up to 10 percentage points, the biggest reduction in 28 years

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