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Industry demands 5% cut in corp tax, withdrawal of MAT

The Industry on Tuesday demanded slashing of corporate tax rate to 30 per cent, abolition of minimum alternate tax and reintroduction investment allowance, with Finance Minister Yashwant Sinha assuring further rationalisation of tax structure.

In the pre-budget meeting with Sinha, captains of industry asked government for enhancing public spending in infrastructure sector to revive the economy and come up with a growth-oriented budget to intensify reform process.

Industrialists sought further cut in interest rates, speeding up of financial sector reforms and sops for agricultural sector to perk up rural demand. The industry also wanted protection from cheap imports and asked government to keep import duties untouched for at least one year.

Referring to the last budget, Finance Minister Yashwant Sinha said that the government was committed to lowering customs tariff to 20 per cent in three years and to continue with the trends in rationalisation and simplification of tax rates.

He also said the government was in favour of reducing interest rate over time.

Government, he said, would dismantle administered pricing mechanism of petroleum products from April.

"We have asked government to reduce corporate tax from 35 to 30 per cent. We have also asked for withdrawal of MAT," Confederation of Indian Industry president Sanjiv Goenka told reporters after the meeting.

He said CII also asked for reintroduction of 25 per cent investment allowances to boost the manufacturing sector.

FICCI chief R S Lodha said the chamber also sought hike the personal income tax slabs.

He said the import duties should not be reduced for at least one year. Videocon Group chairman V N Dhoot sought a differential import duty regime, saying, "It is essential to look at the working of the key sector of the industry to see whether they would require a slightly higher rate of fiscal support by way of import duties slightly higher than 20 per cent."

Assocham President K K Nohria sought simple and moderate taxation on perks as also enhanced public spending on infrastructure projects to stimulate demand for basic and capital goods industry.

However, Nohria said care should be taken to control the revenue deficit and a proper institutional mechanism evolved to ensure effective use and results.

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