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CII for MAT abolition |
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| December, 26th 2007 |
Continuation of the existing peak customs duty rate, abolition of MAT and surcharge on corporate tax, review of fringe benefit tax (FBT), reduction in excise duty on cars and extension of R&D benefits to all sectors are some of the suggestions by the top industry body CII in its pre-Budget proposal.
“Imported goods have already become cheaper by 10.35% due to appreciation of rupee against the dollar since March 1, 2007,” CII said, recommending no change in the peak customs duty. Suggesting a reduction in excise duty from 24% to 14% on cars, multi-utility vehicles and petrol-driven goods vehicles, it has also recommended a similar cut for certain goods like processed foods, pesticides, drugs & medicines from 16% to 8%. The chamber has also asked for Cenvat rate to be lowered to 14% to 16%.
Other suggestions include abolition of MAT or reduction to 5%, considering only the element of personal benefit to employees for taxation under FBT, encouraging corporate restructuring by providing benefits under Section 72A of the IT Act and re-introducing deductions available under sections 80HHC-80HHE of the Act to exporters.
To encourage availability of risk capital, CII has suggested extension of pass-through benefits under section 10 (23FB) of IT Act to private equity and venture capital funds. It has also asked for a clear distinction between trading and investing for calculating capital gains tax. CII has suggested that a holding period of less than 15 days be considered capital gains from trading, a holding period of 15- 179 days as short term capital gains and any holding period above 180 days as long terms capital gains.
The chamber has outlined building people, strengthening rural economy and enhancing competitiveness as key focus areas to aid inclusive and sustainable high growth. The chamber has proposed that any training expenditure incurred by the industry be treated at par with R&D expenditure eligible for deduction from income tax at 150%. CII has recommended tax incentives for R&D in agriculture and allied sectors, including food processing, under Section 35(2AB) of IT Act.
CII has suggested bringing more services under the tax net to broaden the tax base but has asked for service tax exemption on exploration & development and production activities related to oil and gas, construction activities for infrastructure and trade & industry associations. It has asked for reduction of CST rates from 3% to 2% in the next fiscal to facilitate transition to Goods & Services Tax (GST) and inclusion of natural gas in the list of “Declared Goods”. CII has also requested for announcement of suitable GST model as a next step to implement by 2010. |
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