The Hindu Business Line : Chamber wants expert panel set up to study all I-T sops

Suggestions
Tax exemptions, reliefs, incentives etc. should be classified under different important heads.
Exemption removal or continuance should be discussed as part of an overall Scheme of Fiscal Reforms, and not in isolation.

Kolkata , July 10

, Responding to a recent CBDT notification on "Removal or continuance of exemptions and deductions under the Income-Tax Act, 1961, and seeking comments from all stakeholders, the Merchants Chamber of Commerce (MCC), in a recent representation to the Union Finance Minister, has suggested that tax exemptions, reliefs, incentives etc. should be classified under different important heads and discussed on the basis of such classifications.

Broad heads

Some of the broad heads suggested by the chamber are growth of industry, trade and infrastructure, exports, foreign investment and NRI inflows, research and development, recognition and awards and promotion of savings, investment, capital formation and social security.

It is felt that since most of the specified tax exemptions were critical to the national economy, their removal or continuance should be discussed as part of an overall Scheme of Fiscal Reforms, and not in isolation - the more so, as an expert committee was already examining in depth the entire I-T Act.

According to Mr Santosh Saraf, President, MCC, each exemption should be reviewed on the basis of "broad principles and objectives affecting the purpose of each relief provision".

Expert panel

It is suggested that an expert committee be set up to study the entire gamut of tax reliefs under the Act as a part of the overall Scheme of Fiscal Reforms, after due consideration of the total revenue gains as well as overall impact of the reliefs on various socio-economic factors including GDP, employment, investment, forex inflow, export g rowth, social security etc.

Revenue leakage

Mr Saraf said the review proposal seems to be based on the belief that revenue leakage and complications in income-tax are caused by a large number of exemptions and deductions. Such exemptions, he felt, do not necessarily mean revenue leakage.

Complications, according to him, arise in most cases because of the attitude of the administration and not just because of the I-T provisions.

"In fact, the reliefs have led to a surge in revenue for many sectors of the economy.."

Rebutting the Government's argument that discontinuance of tax reliefs would be compatible with lower rates of income-tax, Mr Saraf said that in recent years, the effective tax rates have increased because of levy and continuance of surcharge and cess, "although the need for these has ceased to exist".

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