CEOs say tax cuts will raise consumer demandFebruary 27th, 2008 - 4:54 pm ICT by admin
New Delhi, Feb 27 (IANS) Consumer demand is expected to receive a major thrust with the likelihood of Finance Minister P. Chidambaram scissoring income tax limits in the upcoming budget of 2008-09, a leading industry chamber said Wednesday after a survey of chief executives. According to a survey conducted by the Associated Chambers of Commerce and Industry of India (Assocham), leaders of Indian industry expect a “significant hike” in tax exemption limit compared to last year.
“The rise in tax exemption limits may be accompanied by rejig in the income tax slabs. At present, the income up to Rs.1,10,000 is exempted from income tax in case of individuals while the exemption limit is Rs.1,45,000 in case of women and Rs.1,95,000 in case of senior citizens,” said Assocham president Venugopal Dhoot.
Of the 185 CEOs surveyed, almost all expressed a desire of having the corporate slab of 30 percent to start from Rs.500,000 income.
However, 72 percent of the CEOs wanted a major structural shake-up in the income tax slabs.
In the light of the government experiencing buoyancy in corporate tax, 86 percent expressed a strong preference for a tax cut, while 79 percent said this would not affect the revenue generation, rather enhance the compliance rate.
As many as 83 percent replied in the negative in terms of reduction in the peak customs duty to make imports cheaper in the backdrop of an appreciating rupee against the dollar.
The chamber however indicated a major restructuring of the inverted duty structure.
The inverted duty structure impacts the domestic industry adversely as it has to pay a higher price for the raw material in terms of duty; the finished product on the other hand lands at lower duty and costs less.
Most of the survey respondents were confident of higher budgetary allocations for social sectors like education, health and rural development, the chamber said.
“With the upward pressure on the global prices of crude oil, resulting in huge losses for the oil companies in India and potential of increasing the inflation rate, the industry leaders are expecting restructuring in the tax structure imposed on the import and refining of oil,” Assocham said.
A whopping 78 percent indicated that the finance minister might reduce the customs duty on import of crude oil and products from present 5 percent to 2.5 percent.
The two and three-wheeler segment is also expected to witness reduction of excise duties, which had been adversely affected due to high interest rates.
Likewise, the textile sector, which has also been severely affected in terms in job losses and losing of export markets due to a hard rupee, can expect a slew of incentive packages, Assocham said.
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