Industry representatives have called for a reduction in corporation as well as personal income tax rates in the forthcoming Budget.

At a meeting with Finance Minister P Chidambaram on Tuesday, the Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India recommended that the basic annual exemption limit for individuals should be raised to Rs 1,50,000 from Rs 1,10,000 and the peak income tax rate be cut to 25 per cent, from 30 per cent at present.

While Assocham sought removal of 10 per cent surcharge on corporation tax, Ficci was in favour of bringing corporation tax rate to 25 per cent from 30 per cent. Both Ficci and Assocham sought a tax rate of 20 per cent on income up to Rs 5,00,000 and 25 per cent over Rs 5,00,000.

The Confederation of Indian Industry has also sought a moderation in personal and corporation tax rates, in order to maintain buoyancy in tax collections and compliance, CII president and Bharti Enterprises Chairman Sunil Mittal said.

"Incentives should be given to capital goods industry," Mittal said, adding that skill development should also be promoted.

Ficci President Habil Khorakiwala said: "Research and Development (R&D) and innovation in all sectors should be promoted by giving incentives."

He also sought infrastructure industry status for hospitality and renewable energy. The association has also sought additional deduction limit of Rs 1,00,000 for long-term investments such as life insurance premium, pension and annuities.

Ranbaxy's [Get Quote] Malvinder Singh and Nicholas Piramal's [Get Quote] Swati A Piramal demanded tax benefit to standalone R&D companies in the pharmaceutical sector.

Other demands from the industry include cut in excise duty rate from 16 per cent to 14 per cent, infrastructure status for cold-chains, basic food items made tax free, extension of tax benefit for IT and software beyond 2009, removal of dividend distribution tax, lower tax rate for repatriated profits and gains from overseas.

They also suggested reforms in agriculture, strengthening manufacturing and infrastructure sectors, encouraging savings and investments, and widening the tax base to sustain the buoyancy in the economy.