The Hindu Business Line : Corporate sector paying due share of taxes: Chidambaram <br>Hopes to net a `tidier sum' in arrears

THE Finance Minister, Mr P. Chidambaram, on Thursday made clear his intention not to hike corporate tax rates even as he highlighted that the bulk of the direct tax revenues for 2005-06 are to come from the corporate sector.

"It is wrong to say that poor are being taxed and the rich are not being asked to bear their share of the burden. Corporates are paying huge amount of taxes," Mr Chidambaram told newspersons at the North Block here today.

The Finance Minister made a presentation on the sectoral achievements of the United Progressive Alliance (UPA) Government during its first year in office.

Stating that the corporate sector was paying its due share of taxes, Mr Chidambaram at the same time maintained that the Indian corporate sector was not among the highest taxed in the world.

The UPA Government is looking to achieve another milestone in direct tax collections during 2005-06. It is hoping that the direct taxes to gross domestic product (GDP) ratio would cross the 5 per cent level in 2005-06. For the first time, after many years, the direct taxes to GDP ratio had crossed the 4-per cent mark to touch 4.32 per cent in 2004-05.

The Finance Minister highlighted that the corporate sector's contribution to the tax kitty came mainly in the form of corporation tax, excise duty and Customs duty. For 2005-06, the corporate sector's corporation tax contribution was expected to be around 3.18 per cent of GDP (2.67 per cent in 2004-05). Its contribution towards excise duty and Customs duty has been estimated at 3.49 per cent (3.24 per cent in 2004-05) and 1.53 per cent (1.81 per cent) of GDP respectively. The tax-GDP ratio for 2005-06 has been budgeted at 10.63 per cent.

Having collected nearly Rs 10,000 crore as tax arrears during 2004-05, the Finance Minister is now keen to recover a "tidier" sum in 2005-06. He declined to state the target on this count. "Last year, I had said that a tidy sum would be collected. I collected nearly Rs 10,000 crore as against Rs 6,200 crore in 2003-04. This year it will be a tidier sum," he said.

Mr Chidambaram also said that the ongoing task of strengthening tax administration through computerisation and decentralisation and delegation of powers would continue.

As regards the legislative business carried out by the Finance Ministry during 2004-05, Mr Chidambaram highlighted that 11 Bills of the Finance Ministry were introduced in Parliament and enacted in a 12-month period.

"There is much more legislative business to be done. I will during the course of next week come up with the pending legislations as well as the intended legislative agenda from the Finance Ministry's side," he said.

On the Investment Commission headed by industrialist Mr Ratan Tata, Mr Chidambaram said the Commission had submitted its first report and was now actively engaged with global corporations in steel (Posco), mining (Lafarge) and ports (Mitsubishi).

As regards the growth prospects for the economy for 2005-06, Mr Chidambaram said that the Reserve Bank of India's expectation of a 7 per cent growth rate depended on the monsoon as well as on the actions of the Government.

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