The Hindu Business Line : India Inc assures more robust show if corporate tax rates are lowered

Pre-budget meet: The Union Finance Minister, Mr. P. Chidambaram, greets captains of industry (from right): the Nicholas Piramal India Director, Ms Swati A. Piramal; the Ranbaxy Laboratories CEO & MD, Mr Malvinder Singh; and the FICCI President, Mr Habil Khorakiwala; at the pre-Budget meeting at North Block in the Capital on Tuesday. —

Our Bureau

New Delhi, Jan 8 Corporate India on Tuesday urged the Finance Minister, Mr P. Chidambaram, to moderate its direct tax burden, promising that industry would respond with even more robust performance if corporate tax rate were cut in Budget 2008-09. Fiscal incentives have also been sought to encourage India Inc to expand its footprints abroad.

Although the captains of industry were unanimous in their submission that the tax outgo for corporates should be lowered, they however came up with different suggestions on how the burden should be minimised. In April-December 2007, the Centre’s corporate tax collections registered a 39.84 per cent increase to Rs 1,27,683 crore.

Ways to do it

While the Federation of Indian Chambers of Commerce and Industry (FICCI) President, Mr Habil Khorakiwala, suggested that basic corporate tax rate be reduced from 30 per cent to 25 per cent, the Assocham President, Mr Venugopal N. Dhoot, pitched for abolition of surcharge while suggesting that the basic rate of 30 per cent may be retained.

“We have proposed reduction in tax rates,” Mr Sunil Mittal, President of Confederation of Indian Industry (CII), told reporters after the pre-Budget meeting with the Finance Minister here today.

The captains of industry have conveyed to the Finance Minister that he would see even better performance from industry if corporate tax rates were to be lowered.

Citing inflation concerns, especially on food items, both FICCI and Assocham have suggested that personal income tax burden should be lowered. “The peak income tax rate should be reduced to 25 per cent from 30 per cent and should be levied on more than Rs five lakh,” Mr Dhoot told reporters.

Both the industry associations demanded reduction in excise duty rates. While FICCI favours excise duty cut to 14 per cent, Assocham sought cut in excise duty to 12 per cent. Currently, the Cenvat duty rate is pegged at 16 per cent.

India Inc also suggested that the tax exemption on information technology sector expiring in 2009 be extended. The Larsen & Toubro Chairman, Mr A.M. Naik, said the Government should impose a special import duty of 35 per cent on Chinese products coming into the country to give a level playing field for domestic manufacturers.

The pharma industry asked the Finance Minister to expand the scope of tax deduction to third party R&D activities instead of just in-house activities.

Both FICCI and Assocham have also made a case for bringing agricultural incomes under the income-tax net.