India Inc has strongly recommended the retention of existing tax levels and speedy implementation of the value added tax in its meeting with Finance Minster P Chidambaram.
Nearly a dozen captains of industry, including Ashwin Dani, vice-chairman and managing director, Asian Paints; Venu Srinivasan, CMD, TVS Motor Company; Nusli Wadia, chairman, Bombay Dyeing; Jagdish Khattar, MD, Maruti Udyog Limited, and the heads of the Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Assocham, met the finance minister to put across their suggestions for the forthcoming Union Budget.
Sectors like food processing and housing received the maximum attention during the meeting, according to Venu Srinivasan. "These sectors were identified as important for large-scale employment generation," he said.
During the meeting, Srinivasan also suggested that the government should go all out to attract big foreign investors in food processing, as it would go a long way in improving the overall agricultural sector. The FM has asked the industry to present a detailed report on improving the food-processing sector.
At the two-hour long meeting in the Fresco Room in North Block, each person made a seven minute presentation after which the finance minister reportedly asked a few short, but pointed questions.
India Inc was fiercely opposed to levying of any additional cess such as the proposed
"We suggested that corporate tax should be brought down to 25 per cent from the current 35 per cent in the next two years," said YK Modi, president, FICCI.
The CEOs present were also strongly in favour of rationalisation of duties. The excise duty rate should not be more than 16 per cent," said Modi. He also suggested that farm income exceeding Rs 500,000 should be taxed at a flat rate of 15 per cent.
VN Dhoot, chairman, Videocon International, reportedly suggested that India should reconsider some of the foreign trade agreements it has recently signed. "FTAs should come into force only a year after we have successfully implemented VAT," he said.
But according to Mahindra, Chidambaram felt that it was too late to reconsider the FTAs and that they were here to stay. The FM assured the industry that their concerns would be kept in mind during future FTA treaties.
According to Ashwin Dani, the industry urged the FM to implement VAT at the earliest and set a deadline for the implementation. "The FM reiterated his commitment to VAT, but declined to set a deadline for its implementation," he said.
President of Assocham, Mahendra K Sanghi, said the corporate tax rate should be brought in line with the personal tax rate of 30 per cent and the tax slab increased, as recommended by the taskforce of direct taxes to increase national savings and investment.