Financial Daily from THE HINDU group of publications
Saturday, Dec 28, 2002
Industry & Economy - Income Tax
Is the party over for savings?
NEW DELHI, Dec. 27
IF there is one recommendation of the Kelkar Committee that looks to be a political hot potato, it is the one on abolishing almost all the tax rebates for savings.
Earlier this month, the BJP had voiced its opposition to this proposal made earlier in the consultation paper. A party panel headed by Mr Rajnath Singh had at a recent party conclave made it clear to the Government that this recommendation should not be accepted.
"In the absence of adequate social safety net, it is necessary to encourage savings habit, especially among the lower income group. Moreover, household savings constitute an important source of investment by the Government especially the State Governments. Therefore, the Task Force's recommendation should not be accepted, '' the party had said recently keeping in view the interests of its constituents, the middle class.
Contrary to reports, the Kelkar Committee has refused to budge from its original stand on this recommendation.
The party also made no bones about its opposition to any proposal to impose tax on agricultural income. The time was not opportune for this, it had said.
Otherwise, there are several proposals of the committee that the party is bound to welcome. For instance, the higher income-tax exemption limit of Rs 1 lakh.
As the party has said, this will remove 80 lakh lower middle class persons from the tax net and release resources of the I-T Department.
The BJP had also supported the proposal to abolish dividend tax and tax on long-term capital gains, which it reckoned would lead to the revival of the capital markets besides providing the much-needed fillip to investments in the economy.
The party has also been in agreement with the Kelkar panel on the reduction of the multiplicity of rates of customs and excise, and overhaul of the tax administration.
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