FICCI asks for wide-ranging tax reform measures

Apex industry chamber FICCI has asked Govt for doubling of I-T exemption limit, cut in commodity and service taxes and standard deduction on contribution for new pension scheme.

Demanding simplification of tax structure, apex industry chamber FICCI on Wednesday asked for various sops including doubling of the Income Tax exemption limit, cut in commodity and service taxes and standard deduction on the contribution for the new pension scheme.

HT Image

Besides investment allowance for India Inc to spur growth in economy and implementation of Value Added Tax, FICCI also sought clarity on BPO taxation, waiving off Minimum Alternate Tax and Special Excise Duty and simpler import duties with lowest rates for raw materials and highest for finished goods.

In its memorandum submitted to the Government, the chamber asked for concessions for the capital markets including doing away with dividend distribution tax and cap on deduction for provisioning of bad assets of banks, besides seeking tax sops on foreign dividends and capital gains and for facilitating merger and acquisitions.

Highlighting that the thrust of the Budget should be for raising investment in agriculture, infrastructure, water, health and education, it also demanded tax concession for sectors including power, housing, iron and steel, petroleum, textiles, cement, entertainment, food processing, pharma, tyres, confectionary and personal care.

Elaborating on the Income Tax slabs for individuals, it said there should be no taxes for income below Rs 1 lakh, 10 per cent for Rs 1-5 lakh, 20 per cent for Rs 5-10 lakh and 30 per cent for income above Rs 10 lakh.

On the indirect taxes, FICCI said efforts should be made for "massive" cut in commodity taxes on demand elastic items to stimulate demand in the economy.

Demanding cut in service tax to five per cent from the existing eight per cent, FICCI said all services should be covered under such tax net while exemptions should be limited only to public services, utilities and merit goods.

On the pension sector, which could absorb higher savings, it said persons joining the scheme should be eligible for deduction from the income chargeable to tax with a minimum ceiling of Rs 60,000 per annum.

Emphasising investments in core sector to spur industrial growth, it sought investment allowance as it existed in many of the developed economies.

Seeking early implementation of VAT, the apex chamber asked for one national rate, uniformity in legislation and rules and inclusion of all domestic taxes under VAT.

Terming BPO tax as 'ambiguous', it said, the decison to tax multi-national companies' BPO operations providing core service was a hurdle to growth as these companies might opt out India.

Critical on Minimum Alternative Tax (MAT) since it hits the internal resource generation of companies, thereby resulting in shelving of their expansion plans, FICCI asked for restoration of tax credit facility.

Demanding scrapping of Special Excise Duty, it said the overall incidence of duty and other levies on manufacturers should be "drastically" reduced and it should not exceed 16 per cent of the final price to the consumer.

FICCI also sought reduction in stamp duty rates and said demerger should be allowed and approved by shareholders and lenders based on business valuation.