Hike interest deduction limit for housing loans to Rs 5 lakh: Assocham
December, 04th 2012
Raise personal income-tax exemption limit to Rs 3 lakh, reduce service tax and excise tax to 8 per cent from 12 per cent and increase deduction of interest on housing loan to 5 lakh to revive consumer demand and boost investment, Assocham said in its pre-Budget recommendations to the Government.
The effective rate of corporate tax should also be brought down to 25 per cent from 32.45 per cent at present.
The Centre must restore the excise duty and service tax rate to an earlier level of 8 per cent, Assocham President Rajkumar Dhoot has said.
The excise and service tax rates had been increased in the last two Budgets from 8 per cent to 12 per cent. Meanwhile the industrial growth has significantly fallen and due to low capital investment and high inflation, the demand for indigenous goods and services has been affected adversely. It is therefore, recommended that the excise duty and service tax rates should be restored to the earlier level of eight per cent prevailing two years ago, the memorandum said.
If the excise and service tax rates are restored to 8 per cent, then it would give a much-needed boost to industry, Dhoot said.
The Customs duty rates could be selectively raised to neutralise the effect of lower tax rate of excise duty and service tax, Dhoot said after releasing Assocham's pre-budget memorandum here today.
The base exemption limit of resident individual below the age of 60 years should be increased to Rs 3 lakh, to incentivise people to come into the tax net, ensure higher collection from greater compliance and encourage consumption and savings, the pre-Budget memorandum for 2013-14 said.
"Budget 2013-14 will be a good opportunity for the Finance Minister to boost the confidence of industry and investors, Dhoot said.
He said it was essential to revise the rate of depreciation on plant and machinery back to 25 per cent from the existing level of 15 per cent in view of the technologies.
The chamber said the tax base for goods and services has already expanded to generate high revenue and the government can selectively increase Customs duty rates to neutralise the effect of lower tax rate of excise duty and service tax. Besides, by increasing Customs rates, the Government should protect the domestic industry from unfair competition from countries like China. There are cases where goods are being sold in the global market below production cost in highly competitive markets abroad.
At present, the limit of deduction of interest on housing loan is Rs 1.50 lakh per annum. This should be increased to Rs 5 lakh to boost the housing sector as also give relief to middle class families.
Moreover, to encourage investments in infrastructure during the 12th Plan period, the deduction under 801A(4) profit linked incentives in form of 100 per cent deduction of income in SEZ development must be continued, says the chamber chief.
With a view to having a level-playing field and removal of such levies in the proposed Direct Taxes Code (DTC), the additional levy of tax by way of surcharge and education cesses should be removed on corporate assessees and similarly education cess on non-corporate assesses. The surcharges, including the education cess were levied as a temporary measure.
The pre-Budget memorandum for 2013-14 was jointly released by the chamber President Dhoot, Chairman and Co-Chairman of taxes council Ved Jain and J.K. Mittal; and chamber's Secretary-General D.S. Rawat.