With the Finance Minister deciding against holding pre-Budget meetings this year, this series sekd to find what leading businessmen, economists and politicians wanted to tell the minister, but couldn't do so:
Ashok Soota, President, CII
The thrust of this year's Budget recommendations is to push for an 8 per cent GDP growth and 11 per cent growth in the manufacturing sector.
To achieve these targets, industry needs to have a simple and rational tax structure. CII has submitted its detailed recommendations to the finance ministry.
Its key recommendations on direct taxes include abolition of the 5 per cent surcharge on personal and corporate taxes and abolition of the MAT. CII has also made a strong case for the growth of textiles and tourism sectors.
It has recommended that excise duty on yarn, woven and knitted fabrics, garments and made-ups be reduced to 8 per cent.
CII is also concerned about the fiscal situation of the government, especially at the state level. The government must think of innovative ways to help states reduce their debt burden.
Sector-wise/Housing
Kelkar says:
- The recommendation to eliminate the tax exemptions on interest for self-occupied houses was based on the considerations of horizontal equity between various sectors.
- The current treatment generates a tax distortion in the investments by households as similar investments for education do not get tax benefits.
- The tax benefits are violative of vertical equity as richer sections are subsidised to purchase their own houses, which is not justified in a fiscally constrained economy, and
- The final recommendation of the task force to allow an interest subsidy of 2 per cent for housing loans up to Rs 500,000 will cover around 85 per cent of the total borrowers.
FICCI says:
- To make housing loans affordable, housing finance institutions should provide long-term loans of 15-20 years.
- The deduction under Section 80 IB is at present available for residential units where construction started before March 31, 2001, and will be completed in 2003. This should be extended up to 2010.
CII says:
- To reduce interest burden on borrowers, housing finance should be granted the same fiscal concessions as are available for infrastructure finance. Housing Finance Institutions could also be permitted to raise funds on a tax-free basis for onward lending.
- Taxation on differential rate of interest on housing loans should be based on the actual cost to the employer and the rate at which it has been lent to the employees.
