The Hindu Business Line : CII calls for doubling direct tax revenue by '07

THE Confederation of Indian Industry (CII), in its pre-budget recommendations, has called for doubling direct tax net by March 2007, by including agricultural incomes and greater coverage of professionals and self-employed.

The industry chamber has called for rationalising the indirect tax structure by focussing on growth rather than rates, to improve tax revenues.

It has suggested the announcement of a roadmap for achieving duty rates of 5 per cent, 8 per cent and 10 per cent as recommended by the fiscal responsibility and budget management task force.

For improving the investment climate, the industry body has suggested various measures including removal of infrastructure bottlenecks, facilitation of entry and exit conditions and effective regulatory mechanisms in each of the infrastructure sector.

On direct taxes, the CII called for reduction of corporate tax to 30 per cent from the existing rate of 35 per cent in line with the recommendations of the Kelkar Task Force and removal of the 2.5 per cent surcharge.

The CII has further called for a review of all the existing exemptions granted under the Income-Tax Act, 1961, by a task force comprising Government and industry representation.

"In order to encourage companies to undertake in-house scientific research in the areas of drug development, biotechnology, chemicals, computer, telecommunications and automobile, the weighted deduction of 150 per cent of the expenses incurred on scientific research should be extended for a further period of at least five years," the industry chamber stated.

For the benefit of the capital market, all transactions in the listed equity shares must be subjected to the same securities transaction tax and capital gains tax incidence, it added.

CII has also suggested a reduction in peak rate, that is the most common rate of customs duty from 20 per cent to 15 per cent in the next budget. It has also called for "eliminating zero per cent customs duty except for life-saving drugs, security-related items and those agreed to, through multi/bilateral agreements".

It has called for removing the existing anomalies in the structure of customs duties for products such as glycerine, electricity meters, aluminium, and reduction of Cenvat from 16 per cent to 14 per cent.

Moreover, it has proposed the reduction of excise rate from 16 per cent to 8 per cent and withdrawal of 8 per cent special excise duty.

The industry body has called for exempting excise duty on equipment supplied to R&D industries and IITs as CVD is exempted on imported equipment. It has also called for setting up an advisory committee to look into matters related to abatement, as recommended by the Task Force on Indirect Taxes.

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