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Rangarajan for status quo on tax rates

Prime Minister's Economic Advisory Council favours status quo on income tax rates, but wants fiscal sops for industries hit more than others by a rising rupee and monetary tightening, reports Gaurav Choudhury.

business Updated: Jan 16, 2008 21:59 IST
Gaurav Choudhury

Prime Minister's Economic Advisory Council favours status quo on income tax rates, but wants fiscal sops for industries that have been hit more than others by a rising rupee and monetary tightening.



C Rangarajan, who chairs the council, met Finance Minister P Chidambaram on Wednesday as prebudget consultation entered the final lap.



"On direct taxes, we should keep tax rates stable but there could be some adjustment in slabs," Rangarajan said after the meeting.



Many experts believe the finance minister could raise the tax exemption limit from the existing Rs 1.1 lakh per annum, but might not tinker much with personal income tax rates.



"We said there could be some adjustment in indirect taxes to stimulate growth in consumer durables," Rangarajan said.



India's industrial growth has slowed in recent months, dipping to as low as 5.3 percent in November, following tight monetary measures and a sharp appreciation of the rupee. Some sectors such as textiles, leather, handicrafts and consumer durables have been hit more than the others.



Still, Rangarajan felt the economy would grow at about 8.5 per cent in 2008-09 even as the manufacturing sector remained an area of concern.