The Prime Minister’s Economic Advisory Council has recommended that the Finance Minister should adjust indirect taxes on consumer goods in Budget 2008.

This move, the EAC feels, will give manufacturing growth a push, and help maintain economic growth at around 8.5 per cent. The Council also advised the Finance Minister to increase public investment, and make adjustments in the income tax slab to stimulate the economy. The council did not, however, give any specific suggestions regarding reduction in tax rates.

C Rangarajan, Chairman, PM’s Economic Advisory Council, said, “I think in general, the view is that we should keep the tax rates the way they are. But some adjustments in the income tax could be possible, in the slabs etc; not any substantial reductions.”

C. Rangarajan, Chairman, Prime Minister’s Economic Advisory Council, releasing “Review of the Economy 2007-08” in New Delhi.

Recent government data on tax collections paint a generally flattering picture of the economy and the tax collection machinery in so far as direct taxes are concerned. During the first nine months of the current fiscal, personal income-tax collections rose by 50 per cent and corporate tax revenues by 39.84 per cent as compared to the same period last year. If, as expected, the trend continues, collections from income and corporate taxes will comfortably exceed Rs. 267,400 crore and may even touch Rs. 300,000 crore.