Economy

EY for tax breaks, higher capital expenditure

Our Bureau New Delhi | Updated on July 03, 2014 Published on June 05, 2014

India can increase its growth rate by 1.5 percentage points in 2014-15 leading to growth of 6.2 per cent if steps such as tax breaks to drive small savings and boosting demand by increasing capital expenditure equivalent to 4 per cent of GDP are taken, global professional services firm EY has said.

The new Government could accelerate growth if it offers income tax breaks to drive small savings and stimulate demand by increasing capital expenditure, said DK Srivastava, Executive Director-Transaction Advisory Services, Ernst & Young LLP.

A combination of structural corrections, confidence in new Government and favourable global conditions could propel economic growth to go beyond 8 per cent in three years.

To increase disposable income with households, the Centre should in the upcoming Budget double the income tax exemption slab to ₹4 lakh from ₹2 lakh.

A separate tax deduction should be provided for money parked by taxpayers in small savings schemes, for which the Section 80C limit of ₹1 lakh could be enhanced, he added.

“These tax breaks alone could result in a 0.5 percentage point increase in overall GDP growth,” Srivasatava said.

Published on June 05, 2014
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