Industrialists have urged for a cut in the peak personal income-tax rate by 5% in the forthcoming budget to boost consumer spending and revive industrial performance, which contracted 2.3% in March. In a pre-budget meeting with revenue secretary PV Bhide, a delegation from industry body Federation of Indian Chambers of Commerce and Industries (Ficci), comprising its president Harsh Pati Singhania and Bharti Enterprises vice-chairman and managing director Rajan Mittal, pressed for reduction in personal income-tax and corporate tax to 25%.
At present, the maximum income-tax rate of 30% is applicable on income above Rs 5 lakh. This rate should be levied on an income of over Rs 10 lakh, the chamber said, to leave more money in the hands of consumers. Corporate houses are also taxed at 30%.
Mr Singhania also favoured broad-based fiscal reform to push investment-led growth. He, however , admitted there is little scope for more tax sops given the governments weak financial position. This year, there is a particularly difficult situation due to the revenue deficit and I think the government has limited scope for doing things, Mr Singhania told reporters after meeting revenue secretary Bhide.
The new government is likely to present the Union budget in two months. The outgoing UPA government tabled the interim budget in February and sought Parliaments nod to spend money to meet expenditure till July.
The Ficci delegation also demanded giving incentives for investment in agriculture, continuation of tax benefits for housing, telecom and power sectors.