More services to fall within tax net in budget Disappointment await salaried and middle class families as finance minister Pranab Mukherjee is unlikely to raise exemption limit on personal income tax and in all probability introduce negative list in service tax thereby bringing in more services into the tax net in the forthcoming budget. After pre-budget consultations with FM, industrialists told reporters that they have asked for raising of income tax exemption limit, cut in corporate tax and it appears that would not happen in the budget.

There are already fears that the budget may rollback the cut in excise and customs duty effected in 2009 as part of the fiscal stimulus to bring about fiscal consolidation after expectations of fiscal deficit overshooting the target this financial year. Fiscal deficit could be over 5.5 per cent of GDP against the target of 4.6 per cent of GDP this fiscal year.

“If there is no cut in excise duties, there should not be at least any increase,” new Ficci president R V Kanoria said. He added that this was the basic representation made by industry bodies like CII, Ficci, other industry and trade bodies to pump-prime the economy.

“We asked for giving infrastructure status to healthcare and education sectors. We also sought speeding up of PSUs disinvestment, widening of tax net and implementing GST as fast as possible,” CII President B Muthuraman said.

There should be growth stimulus in the budget Kanoria said adding taxes should not be the only revenue mobilisation efforts. Disinvestment could be a major source of non-tax revenue. Coal India needed to be privatised. With market cap of Rs 2.5 lakh crore, CIL alone would fetch enough revenue to bridge the deficit.

Other industrialists who attended the meeting included RN Dhoot, Assocham, YC Deveshwar, ITC, Nitin Para-njpe, Hindustan Unilever, Tulsi R Tanti, Suzlon Energy, BP Rao, BHEL. Naresh Trehan, Mdeanta, M Rafeeq Ahmed, FIEO, Som Mittal, Nasscom, Suman Jyoti Khaitan, PHD Chamber of Commerce and Industry, Joginder Kumar, Federation of Tiny and Small Industries of India and RK Sonthalia, Export Promotion Council for EOUs and SEZs.

Mukherjee said there are various challenges like achieving higher growth, keeping inflation, fiscal and revenue deficits at manageable level. “We all have to address collectively.”

Most of the leaders were in favour of reduction in interest rate at least by 50 basis points to send positive signal to boost the investment sentiments. They suggested that service tax base might be widened with a negative list and to exempt infrastructure sector companies and SEZ units from MAT, besides revisiting dividend distribution tax.

Industry wanted a model Land Leasing Act and legalising land leasing in all states, setting-up of national mission on farm mechanisation in PPP mode. Suggestions to make tax evasion difficult and bring more items under tax net came to fore.

Source : mydigitalfc.com, India, dated 04/02/2012