India has to cut personal and corporate tax rates, and lower excise duty rates on manufacturing goods in the next budget to sustain high economic growth, industry representatives said on Tuesday.
In a pre-budget meeting with Finance Minister Palaniappan Chidambaram, industrialists also demanded removal of minimum alternate tax (MAT) and dividend distribution tax (DDT), and a cut in excise duty on most manufactured goods to 14 percent from the present 16 percent.
Federation of Indian Chamber of Commerce and Industry president and chairman of Wockhardt, Habil Khorakiwala, said corporate tax rate should be cut to encourage manufacturers.
"Reduce corporate tax to 25 percent, which along with surcharge and education cess will calculate at 28.33 percent," he said in a note to the finance minister.
Associated Chamber of Commerce and Industry president and Videocon Industries chairman, V.N. Dhoot, said the income tax rate should be cut to 25 percent from 30 percent for income above 500,000 rupees.
"The finance minister was jubilant over growth in direct tax collection and he said both revenue and fiscal deficit will be under control. I think this year income tax rate will be reduced," Dhoot told reporters after the meeting.
Larsen & Toubro chairman, A.M. Naik, said the government should remove MAT and DDT.
Anti-dumping duties on cheaper Chinese products should be imposed as domestic manufacturers were at a disadvantae after the rupee appreciation, he said.
Malvinder Singh of Ranbaxy Laboratories and Swati Piramal of Nicholas Piramal said companies involved in research should get tax incentives.
Industry bodies also asked the finance minister to introduce a goods and services tax from April 2010, and peg the rate at 20 percent.