Financial Daily from THE HINDU group of publications
Friday, Jul 12, 2002
Industry & Economy - Taxation
Sustaining the feel-good factor Govt to go easy on depreciation rates
NEW DELHI, July 11
THE process of `sustaining the feel good factor' in the economy has been initiated by the Finance Ministry. Industry will have cause to cheer as the Ministry has decided not to effect an across-the-board cut in depreciation rates on plant and machinery to 60 per cent.
Instead, it is set to retain the depreciation rates at the existing 100 per cent on some of the items.
The Law Ministry has cleared the Revenue Department's recommendation on the revised rates of depreciation which will be notified shortly, officials said.
The Revenue Department had earlier proposed pruning the depreciation rates on 90-odd items of plant and machinery to 60 per cent.
The cut was proposed mainly to prevent the misuse of high rates of depreciation on plant and machinery for tax evasion.
However, with industry just showing signs of recovery, the Revenue Department has taken the view that it would not be prudent to effect a steep cut in rates at this stage as it would impact the cost of production.
The items include, among others, air pollution control equipment, water pollution control equipment, wooden parts used in the artificial silk manufacturing industry, cinematograph films, instrumentation and monitoring system to monitor energy flows, waste heat recovery equipment, cogeneration systems.
Excise cuts on anvil: Domestic industry may also get some relief on the excise front, with the Finance Ministry mulling over duty cuts on a few items.
Officials, however, ruled out across-the-board excise duty cuts despite collections being buoyant so far. Revenues from excise topped Rs 17,477.03 crore from April to June this year as against Rs 14,377 crore, marking an increase of 21.56 per cent.
The Central Board of Excise and Customs (CBEC) is expected to come up with detailed analysis on the commodity-wise trends in excise collections before a final view is taken on the excise duty cuts.
Meanwhile, the Revenue Department has so far not given any intimation to the Parliamentary Affairs Ministry on whether it would move an Income-Tax Amendment Bill in the forthcoming session.
The only legislation which has been listed (from the Revenue Department) is the Prevention of Money Laundering Bill which is to be passed by Parliament, said officials.
An Income Tax Amendment Bill would have to be introduced if the Finance Minister, Mr Jaswant Singh, takes a decision to restore sops for the salaried middle class.
This segment took a hit in this year's Budget, with the Government pruning the tax rebate available on investments in designated savings instrument under Section 88.
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