More sops for jute, tea; special package for North-East
Chamber suggestions FBT rate on `conveyance' should be brought down to 5 per cent from the existing 20 per cent. IF AT ALL, FBT should be levied only on fringe benefits and not on other business expenses.
The Indian Chamber of Commerce, Kolkata, in recent pre-budget discussions with chairpersons of CBDT and CBEC, has suggested that SMEs, which generate employment, should be fully exempted from service tax.
The chamber has also sought concessions for the traditional industries of eastern India, particularly those in the North-East, such as tea and jute, which were facing hard times. And for the emerging steel and stainless steel sectors, a cap on export of iron ore and chrome ore has been suggested to conserve these vital raw material.
The chamber has recommended a special package for NE development so that industries do not move to Uttaranchal and Himachal Pradesh, which have also received attractive fiscal incentives.
The chamber, in order to provide relief to the middle class, has suggested that the exemption limit should be raised to Rs 2 lakh from the current Rs 1 lakh.
Briefing newspersons here today on the pre-budget recommendations of the chamber, Mr S.K. Bangur, President , ICC, said since the SMEs offered considerably higher potential for job creation, ICC has sought fiscal incentives for such units by way of differential tax rates, so that they could offer products and services at competitive rates.
Stressing on the need for a substantive push to savings in both corporate and household sectors, ICC has suggested that the overall limit of tax on companies should not exceed 30 per cent including all taxes; and for individuals, the maximum rate should not exceed 25 per cent for incomes above Rs 5 lakh, leaving a more investible surplus in the hands of the assessees.
According to Mr D.B. Desai, Chairman of ICC's expert committee on taxation, the FBT rate on `conveyance' should be brought down to 5 per cent from the existing 20 per cent, and that hospitalisation expenses should be exempted. It is suggested that if at all, FBT should be levied only on fringe benefits and not on other business expenses.
He pointed out that expenses such as travelling and conveyance, sales promotion, telephone, guest house, motor car and contribution to superannuation Fund cannot be termed as `fringe benefit'.