Financial Daily from THE HINDU group of publications
Tuesday, Jan 10, 2006
Financial Daily from THE HINDU group of publications Tuesday, Jan 10, 2006 |
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Budget Industry & Economy - Industry Associations India Inc makes a pitch for fiscal, R&D sops — Lower direct tax burden; scrap or simplify FBT Our Bureau
CORPORATE TOPGUNS: The Finance Minister, Mr P. Chidambaram, shakes hands with the Bharti group Chairman, Mr Sunil Mittal, at a pre-Budget meeting with industrialists in the Capital on Monday. The others are (from left) the Reliance Infocomm CMD, Mr Anil D. Ambani; the Ranbaxy Laboratories President- Pharmaceuticals, Mr Manvinder Singh; the CII President, Mr Y.C. Deveshwar; the Videocon group Chairman, Mr V.N. Dhoot; and the Nicholas Piramal India Director, Ms Swati Piramal. - Kamal Narang
New Delhi , Jan. 9 CORPORATE India on Monday presented before the Union Finance Minister, Mr P. Chidambaram, a whole range of fiscal and technology related policy initiatives to stimulate industrial growth that encourages value addition and also create employment. Leading industrialists took the opportunity of their pre-budget meeting with the Finance Minister to drive home the message that direct taxes burden of the corporates is high (when compared with Asean rates) and this was impacting their competitiveness. A section of industry suggested cut in corporate tax rate to 25 per cent. Asean levels: On indirect taxes, the general consensus was that the domestic industry was not averse to the reduction of customs duty to the Asean levels, but was keen that any reduction in peak rate should be accompanied with internal reforms to boost competitiveness of domestic industry. Besides an unanimous call for a hike in the depreciation rate on plant and machinery under the income-tax law from 15 per cent to 25 per cent, India Inc was also keen to see the back of fringe benefit tax (FBT). "Our submission was that FBT should be abolished. If that is not possible, it should at least be simplified and genuine business expenses must be allowed as deduction," Mr N. Srinivasan, Vice-President, FICCI, told newspersons after the meeting. Tax reforms: As part of tax reform measures, FICCI also proposed abolition of dividend distribution tax. For widening the tax base, Mr Srinivasan said that FICCI has suggested to the Government to bring the "rural rich" into the income-tax net. "Our goal should be to have 15 crore assesses over the next five years as against only 3.5 crore plus at present", he said. The Assocham President, Mr Anil Agarwal, said that he had suggested to the Union Finance Minister that FBT should be done away with. He said that the Government could levy an additional 2 per cent as corporate tax rather than levying FBT. CII too, had a similar suggestion, except that the additional levy could be one per cent for those who want to opt out of FBT. Farm, R&D: The CII President, Mr Y.C. Deveshwar, said that there was a need to encourage raw material consuming industries that relied on farm sector (food processing). India Inc also made a case for further fiscal incentives to encourage research and development. FICCI submitted to the Finance Minister that the weighted tax deduction for R&D expenditure be broad-based and made available to all sectors. "Our submission was why should the weighted deduction be confined only to pharma and auto sector? All sectors of the economy should get this benefit," Mr Srinivasan told Business Line. Representatives of the pharmaceutical and biotechnology sector said that they had sought increased support for research in the country, including a tax holiday for encouraging biotech sector. Pharma: "The weighted deduction for pharma industry expires in March 2007. We have asked the Finance Minister to extend it for at least 10 years till 2017. We also want the weighted deduction to be increased from 150 per cent to 200 per cent," said Mr Malvinder Mohan Singh, President-Pharmaceuticals, Ranbaxy Laboratories Ltd. On her part, Ms Swati Piramal, Director-Strategic Alliance, Nicholas Piramal India Ltd, said that price control regulations must be liberalised (under the national pharma policy 2006 that is being formulated). Telecom: Telecom sector representatives made a pitch for rationalisation of taxes (license fee, service tax and so on), including the access deficit charges (ADCs).
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