NEW DELHI: India Inc on Wednesday made a strong pitch before the government not to levy inheritance tax or increase the burden on higher income groups, warning these measures could impact growth.
In their pre-budget consultations with finance minister P Chidambaram, representatives of industry chambers CII, Ficci and Assocham also sought early implementation of the goods and services tax (GST), fiscal consolidation measures and steps to revive growth.
Adi Godrej, president at CII and chairman of Godrej Group, said that any tax increase on the HNIs will create a negative perception and therefore should be avoided. "We used to have 90% rate of taxes and used to have 3% of growth. Lower rates of taxes have been known to give higher collection. Absolute collection should increase," he said.
Naina Lal Kidwai, Ficci president and HSBC executive director, said that higher tax rates may lead to professionals relocating to low-tax domiciles such as Singapore, Dubai or London.
Other industry leaders who attended the meeting included Anand Mahindra, chairman and managing director of Mahindra & Mahindra, Nitin Paranjpe, managing director and CEO of Hindustan Unilever, Som Mittal, president of Nasscom, Ashwin Dani, vice chairman & managing director of Asian Paints (India) Ltd, and Tulsi R Tanti, chairman and managing director of Suzlon.
In the run up to the Union
Budget for the coming financial year, there have been suggestions that the rich should be taxed more to help raise revenues to lower fiscal deficit, and the modalities recommended include inheritance tax, higher wealth tax, and a higher income tax slab for high income categories.
Industrialists don't agree.
Assocham president Rajkumar Dhoot said: "Our opinion is tax them (the rich) but tax them reasonably. They have money and with that money they invest in the country, which generates jobs."
At present, incomes in excess of 10 lakh are taxed at maximum rate of 30%.
Business chambers not only opposed higher taxes, they suggested that the government should lower the incidence of tax on both corporates and individuals.
CII has suggested that surcharge and education cess on corporates should be removed, while Ficci wanted the rate to be lowered from 30% to 25%.
Ficci also wanted 30% rate to apply to incomes in excess of 20 lakh.
Industry leaders also sought deregulation of diesel, argued against increase in excise, customs and service tax, and said transactions at commodity exchanges should not be taxed.
To increase government's revenues, they suggested that the disinvestments target for the year be set at 30,000 crore and start the process early.
Confederation of Indian Industry (CII) said that the industry wanted early implementation of GST and expects early resolution of issues related to the amendment of the Constitutional Amendment Bill, which was introduced in the Parliament on March 22, 2011.
Ficci's Kidwai said Kidwai said centre should reach out to state governments on GST and come out with a clear plan of implementation and timing at the earliest.
The finance minister said that there are some positive signs in the economy but no discernible trend so far and, therefore, government's priority was to keep investment cycle going.
Source : economictimes.indiatimes.com