In its pre-Budget wish list to the government, the Confederation of Indian Industry (CII) today demanded a reduction in distribution tax on dividends, abolition of fringe benefit tax (FBT) and a cut in Customs and excise duties.
CII has urged for a reduction in distribution tax from 14 per cent to 5 per cent. It has also asked the government to provide tax credit while computing distribution tax on dividends paid by subsidiaries to parent companies.
The industry body has said FBT should be abolished, or a choice be given to corporates to pay 1 per cent additional corporation tax on its total income. It has also demanded that the minimum alternative tax (MAT) be brought down from 10 per cent to 7.5 per cent. It also supports the total abolition of the levy.
On Customs duty, the CII has said it supports further reduction in peak rate to 10 per cent. The chamber has urged the government to reduce Central Sales Tax (CST) from 4 per cent to 2 per cent with effect from the next financial year.
The CII has also recommended reducing the Cenvat rate of excise duty to 14 per cent from the current 16 per cent. In the forthcoming Budget, definitive measures should be announced towards introducing general sales tax by 2010, its memorandum said.
To raise revenue for investment requirements, especially in infrastructure, the chamber said the limit under Section 80 C should be raised from Rs 1 lakh to Rs 2 lakh, provided the additional Rs 1 lakh savings is in infrastructure bonds.
Under Section 80 C an individual and HUF are allowed to get deduction from the total income on investments not exceeding Rs 1 lakh, the memorandum said.
The industry body has recommended designating incremental tax revenue in the proportion 35:35:20:10 for education, infrastructure, health and other development expenditure.