The Hindu Business Line : There is no case for corporate tax rate cut, says Chidambaram

New Delhi, Feb 29 It’s a leap year Union Budget that had goodies for all sections including the farmer, taxpayer, working women, housewives and consumers although corporates and stock market had mixed views on the Budget proposals. The Finance Minister, Mr P Chidambaram maintained that budget 2008-09 would stimulate growth and has spared corporates of any burden.

Hours after presenting his seventh full-fledged budget, Mr Chidambaram, spoke to Business Line at his North Block office to throw more light on some of the proposals.

Why have you not cut corporate tax rates when the buoyant tax collections had raised expectations of the corporate sector?

Why should it be cut? They are doing well. They are making good profits. They are giving good taxes. Effective rate is 22 per cent. Where is the case for a reduction. Even on a comparable basis (with other countries), they are very comparable at effective rate of 22 per cent

On direct taxes, how optimistic are you in achieving the target? Is it not ambitious or are you betting on economic growth?

I think it is achievable as it is only a growth of 20 per cent that is projected for next year. It is only about Rs 3,65, 000 crore as against Rs 3,04,000 crore for this year.

What is the GDP growth factored in you budget calculations?

I am told 13 per cent nominal. Last year also it was 13 per cent.

On oil bonds and fertilizer bonds, there is no mention of the remaining amount of bonds that need to be issued for the current year? Is it because they are an off budget item?

Oil bonds is an off budget item. So why should it figure in the budget documents. We mentioned oil marketing companies Rs 11,257 crore and fertilizer companies Rs 7,500 crore issued up to revised estimates. Let the issues take place, it will come in the actual.

While you continue to be confident on direct taxes and set somewhat ambitious target, the same does not seem to be the case with excise duty? Have you been conservative with excise duty?

No, I have not been conservative.

The target of Rs 1,37,000 crore was given by the CBEC and I have accepted it.

Why have you not taken a call on extending STPI & EOU benefits?

Why should I take a decision now when it is a matter required to be addressed in a budget one year from now. There is enough time to take a view on that. We have not yet taken a decision on that.

Are you trying to signal where the central GST rate would fall now that excise rate has been lowered to 14 per cent?

We are not signaling anything. All we are signaling is that rates will come down. Obviously 16 is not consistent with GST rate.

You have not provided anything for the pay commission or have you?

Provision for salary and expenses takes into account some increase will take place.

Only the differential increase has to be provided . Even if the Pay Commission is not there, some increase will take place. That has been provided. The differential has to be provided for which I have enough headroom.

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