The Hindu : Business : `Most tax sops likely to go'

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Thursday, Mar 08, 2007
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`Most tax sops likely to go'

Special Correspondent

Reliefs only for weaker sections

NEW DELHI: The Union Finance Minister P. Chidambaram on Wednesday cautioned corporates that the government would examine all tax exemptions and withdraw most of them, if possible, to usher in an exemption-free tax regime in the coming years.

Exceptions, however, would be made and the tax exemptions would be restricted to the most vulnerable sections of the society such as senior citizens, and for specific fields such as promotion of research and development (R&D) and frontier knowledge areas, he said.

Announcing this at a post-Budget interaction with the Confederation of Indian Industry (CII) here, Mr. Chidambaram said: "Every exemption... as Prime Minister has said, will be examined. Every exemption that has to be removed will be removed."

Deriding industry for seeking continued tax exemptions, he said: "Every exemption has a father, every exemption has a grandparent, parent or a foster parent," indicating thereby that while all its demands revolved around exemptions, some of them have to go.

At the same time, Mr. Chidambaram gave an assurance that he was ready to consider the "grey areas", particularly those linked to the farm-related sectors, as agriculture was a priority focus area of the budget for the new fiscal.

Declaring that he was not apologetic about the farm and rural focus in the budget, a point of criticism by certain sections of industry, he said: "As a Finance Minister of the coalition Government, I am obliged to implement the National Common Minimum Programme (NCMP)," which laid emphasis on rural India and agriculture. "While industry may desire that surcharge should be removed...in rural India, people have been waiting for roads for 5,000 years," he said.

In this connection, he mentioned that the budget focus had been on credit, seeds, water, fertiliser and electricity for the farm sector to address the stagnating production of wheat, rice and pulses, in particular.

Stating that the design of the budget was geared towards implementing NCMP promises, Mr. Chidambaram stressed that attention and money had been provided for a new thrust to the agriculture and social sectors. He emphasised that India's strong growth story would continue, based on robust growth of the global economy, high rates of investment and savings, the adaptability of the Indian corporate sector to new technology, and expanding external sector.

The Dividend Distribution Tax, the Minimum Alternate Tax and venture capital pass-through for certain sectors, he said, came under the general category of exemptions, which were in the process of being reduced.

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