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Monday, Feb 25, 2002

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CII plea to widen tax net

Our Bureau

HYDERABAD, Feb. 24

THE Confederation of Indian Industry (CII) has urged the Centre to do away with most of the taxes introduced in the last few years under the head of direct taxes. It favoured further rationalisation of both corporate and personal income-tax structure.

In a memorandum submitted to the Union Finance Ministry, the industry body suggested that the Government could garner higher revenue through widening the net, greater compliance and through higher GDP growth.

CII also recommended tightening of several enforcement issues in the coming fiscal year, which include coverage of PAN, computerisation of all major income-tax offices, rigid enforcement of the one-in-six criterion and incentives to tax officers to ensure compliance.

In a presentation made to the Members of Parliament from Andhra Pradesh here on Saturday, the CII AP Chapter Chairman, Mr D.V. Manohar, said the coverage of PAN was woefully inadequate.

Several people who have applied for their PAN have not received it for over two to three years. The year 2002-03 must not only eliminate the backlog but also substantially increase the number of people under PAN, it said.

Stating that the current state of financial infrastructure was a major worry, CII said the number of weak banks was on the rise, with a huge corporate debt overhang.

The CII recommended the setting up of a pilot asset reconstruction company (ARC) more or less in line with the Verma Committee recommendations. A tax provision for encouraging accelerated provisioning of NPAs of banks, FIs and NBFCs was also favoured. Further, the industry body urged the Finance Ministry to prepare a timetable for the merger and/or privatisation of at least three public sector banks.

On the corporate tax front, CII recommended a reduction in corporate tax on Indian companies from 35 per cent to 30 per cent keeping in view the phase-out of exemptions. Stating that the two per cent surcharge introduced last year to finance rehabilitation of Gujarat earthquake victims has already served its temporary purpose, CII asked the Government to remove the surcharge in the coming Budget.

Personal I-T wishlist

  • Raise ceiling on medical treatment from Rs 15,000 to Rs 25,000.

  • Raise deduction under 80L from Rs 9,000 to Rs 20,000.

  • Increase time limit on deduction of interest on borrowed funds for housing from April 1, 2003 to April 1, 2006.

  • Concessional interest on housing loans offered by companies to employees should not be treated as a perquisite for taxation.

  • Need to review procedures and norms for valuation of perquisites.

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