RATE CUT IN PERSONAL, CORPORATE TAX SOUGHT

Corporates on Tuesday pitched for cut in personal and corporate tax rates and sought imposition of import duty on Chinese products to offset rupee appreciation against the yuan. Unfolding their customary wish list for consideration at a pre-budget consultation with Finance Minister P. Chidambaram here, representative of various industry bodies impressed upon the Minister that the steps sought by them were necessary to spur consumption and investment level.Though industry wanted him to impose 35 per cent import duty on Chinese products, Mr. Chidambaram was quoted by sources as saying that rupee appreciation had not been much in terms of the real effective exchange rate. The Minister is learnt to have observed that though there were reports of a dip in exports due to rupee appreciation, tax collections did not corroborate this. The sources said the Finance Minister was of the view that industry and the services sector needed to sustain high growth rates, as four per cent growth in agriculture alone would not help achieve 9-10 per cent economic growth. For sustaining the high growth suggested by the Finance Minister, industry sought more tax concessions including reduction in the personal income-tax rate from 30 per cent to 25 per cent and that it should be levied on more than Rs. 5 lakh. The corporate tax rate should be retained at 30 per cent, but the 10 per cent surcharge on it should be withdrawn, Associated Chambers of Commerce and Industry of India President Venugopal N. Dhoot told reporters. He demanded tax concessions for corporates making acquisitions abroad. The pharma industry wanted enlargement of the scope of tax rebate to cover third party R&D activities instead of just in-house activities.The Finance Minister is understood to have said that curbing the inflation rate was a major concern, but the government did not have entire control over crude, food and commodity prices. FICCI chief Habil Khorakiwala wanted the Minister to reduce the corporate tax rate to 25 per cent from the current 30 per cent to boost the manufacturing sector. After consultation, Confederation of Indian Industry President Sunil Bharti Mittal said, “Since lowering of tax rates have yielded more tax revenue, we have requested the Finance Minister to further cut corporate tax rates.” Industry representatives also suggested reduction in excise duty, removal of fringe benefit tax on business promotion expenses, retaining customs duty at 10 per cent and extension of tax benefits for the IT sector beyond 2009. Larsen & Toubro Chairman A. M. Naik wanted 35 per cent special import duty on Chinese products to help Indian firms compete against their exports.It was Ranbaxy CEO Malvinder Mohan Singh who demanded 150 per cent weighted deduction in tax for in-house research and development activities to be extended to all R&D activities - www.thehindu.com