The Hindu : Business : Chamber seeks reduction in corporate tax

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Tuesday, Jan 09, 2007
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Chamber seeks reduction in corporate tax

Special Correspondent

GST will simplify tax structure, reduce tax administration

NEW DELHI: The Associated Chambers of Commerce and Industry of India (Assocham) has pitched for a committee, comprising representatives of the Centre and the States, to finalise the structure for the proposed Goods and Services Tax (GST), besides seeking a reduction in corporate tax to 25 per cent with no surcharge from the existing level of over 30 per cent.

Assocham President Anil K. Agarwal in a statement on Monday said industry would appraise the Finance Minister, P. Chidambaram, during its pre-budget discussions here on Tuesday, that replacement of multiple taxes by GST will increase the tax:GDP ratio by 2 percentage points with a whopping amount of Rs. 70,000 crore per annum. Apart from providing the revenue buoyancy, the GST will simplify the tax structure, reduce tax administration and compliance cost. It will improve the competitiveness of Indian industry by eliminating the cascading effect of taxes on production cost.

Mr. Agarwal along with Assocham Senior Vice President Venugopal Dhoot is likely to stress the need to promote India as a corporate headquarter so that MNCs choose India as a manufacturing hub for their products.

Infrastructure development will be another issue that will be debated by the chamber as it feels that $320-billion worth of investment would be needed to upgrade the existing infrastructure to sustain 9-10 per cent economic growth. Although the Railways are doing well, the weakest infrastructural sectors such as roads and airports are in a bad shape and therefore incentives would be required to spur investments in these two crucial sectors.

Assocham will also seek the creation of a common Indian market for growth and competitiveness as it feels that Indian market has been segmented into 29 State markets owing to the non-vatable central sales tax and partial tax credit for stock transfers. Therefore, the Chamber would recommend that CST should be phased out without any further delay and brought down to 2 per cent from April 1, 2007. The chamber will also seek to promote alternative energy sources as it feels that India is heavily dependent on import of petroleum for its energy requirements

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