Rangarajan suggests higher tax for the rich

Chairman of Prime Minister's Economic Advisory Council C Rangarajan on Wednesday said the rates of taxation be increased for the rich with a view to raising the tax-to-GDP ratio.

"One alternative is to increase MRT (marginal rate of taxation) for the rich. We need to improve the tax-to-GDP ratio to meet the growing demand and expenditure," Rangarajan told reporters on the sidelines of the convocation of Indian Statistical Institute (ISI).

He said the existing tax structure was perfect.

Rangarajan said that the other alternative is imposing an additional surcharge for the rich in the existing slab. The MRT for the highest slab is 30 per cent at present.

Asked about the GDP growth for the current fiscal, he said that it would be closer to six per cent, and seven per cent in the subsequent financial year.

At the convocation speech, he said that the world was passing through difficult times and recovery was slow and halted.

India was experiencing a slowdown in growth, he noted.