The Associated Chamber of Commerce and Industry (ASSOCHAM) exhorted the government on Tuesday to reduce income-tax for small and medium enterprises (SMEs) by 10 percent in the coming budget.
In its pre-budget presentation with the Finance Minister Pranab Mukherjee, the ASSOCHAM said that income tax for SMEs should be reduced to 20 percent from present 30 percent while corporate tax should be curtailed at 25 percent.
"Corporate tax in India is still higher as it's effective rates exceed 35 percent and discourages foreign investments including Indian business," the ASSOCHAM president Swati Piramal viewed.
The industry body also demanded that service tax should be extended to all services except those in negative list because it supports the policy of wider tax base with low tax rate which include tax compliance and GDP growth rate.
Piralmal also asked for integration of excise and service tax into Central GST from April 2010 and sought a flawless tax regime which can be ensured with subsuming five key elements: purchase tax, electricity duty and taxes on natural gas, sugar and textiles.
A flawless GST, she said, would reduce cost of production of Indian industry by 10-15% and additional accrue the government annual revenue to an extent of Rs.1 lakh crore.
In the pre-Budget presentation, the industry body strongly advocated for continuation of stimulus package for fiscal 2010-11 also which can be gradually phased out subsequently.
"Stimulus package should not be suddenly withdrawn but should be gradually phased out as the industry is just coming out of recession," the ASSOCHAM chief said.