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Monday, Dec 23, 2002

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CEOs for phasing out tax exemptions

Our Bureau

NEW DELHI, Dec. 22

INDUSTRY is for the elimination of tax exemptions, as has been recommended by the Kelkar Committee in its draft consultative report. This is indicated in the latest snap poll of chief executive officers (CEOs) conducted by the Confederation of Indian Industry (CII).

However, the poll also showed that the top CEOs in the country would rather have the exemptions done away with in a phased manner, than in one single step.

Given a choice between the current tax regime and the one suggested by the Kelkar Committee on corporate direct taxation, 81 per cent of the respondents chose the latter. Among those who participated in the CEO snap poll were Mr Rahul Bajaj, Mr R. Seshasayee, Mr S. Sandilya, Mr B. Muthuraman, Ms Anu Aga and Mr Ratan Jindal.

On the individual taxation front, a majority of the respondents (89 per cent) were in favour of implementation of the Kelkar Committee recommendations that incorporate elimination of rebates under Section 88, elimination of exemptions under Section 10, elimination of dividend tax and standard deductions and a hike in the exemption limit to Rs 1,00,000.

While 19 per cent of the respondents felt that there should be a complete elimination of exemptions in the Union Budget 2003-04, the majority (81 per cent) felt that it should be done in a phased manner.

Asked about the prospects of the economy at the macro level, 81 per cent of the respondents stated that in the current year, the economy would grow at between 5 per cent and 6 per cent. The remaining were of the opinion that growth would be less than five per cent.

In the backdrop of the appreciation of the dollar against the rupee, 54 per cent of the respondents felt that this phenomenon would have a moderately negative impact on domestic exports. Nineteen per cent of the respondents were of the opinion that the impact would be significant and 27 per cent stated that there would be no impact.

Eighty-six per cent were of the opinion that the robust industrial growth seen in the first half of the fiscal would continue during the second half of 2002-03.

However, when questioned on whether the spurt in industrial growth had led to a corresponding increase in profit margins, there was a mixed response. While 24 per cent of the respondents stated that they had posted a significant rise in profit margins, 43 per cent said that the rise had been moderate.

On the prospects at the micro level for their individual companies, a majority (73 per cent) stated that they expected a growth of 10-20 per cent in sales figures in the current fiscal, while 10 per cent expected to post a sales growth of between 20-40 per cent and five per cent above 50 per cent. Twelve per cent of the respondents expect growth in sales to be less than 10 per cent.

A majority (70 per cent) of the respondents have stated that growth in profits for the current fiscal would be 10-20 per cent while 11 per cent forecast growth between 20-30 per cent.

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