Ficci Calls For Advance Tax Provision Scheme

Lowering of corporate and individual taxes to 30 per cent, enhancing the depreciation rate to 33.33 per cent, a tax of only 10 per cent on unaccounted income and introduction of the Advance Tax Provision Scheme (ATPS) are among the measures mooted by the Federation of Indian Chambers of Commerce and Industry (Ficci) to achieve a sustained 7-8 per cent growth in the economy.

The chamber has submitted a 15 point action plan to union finance minister P Chidambaram, Ficci president A S Kasliwal said at a press conference in Mumbai. The plan was presented on January 10 but had been kept under wraps.

Ficci secretary-general Amit Mitra called this the `four quadrant' approach. All the four components have to be implemented. Partial implementation will not suffice, he said.

Currently, corporate tax is 43 per cent . Companies can claim a depreciation of 25 per cent on plant and machinery under the Income Tax Act. Unaccounted income, when declared, is also taxed at around 40 per cent. The ATPS scheme will enable companies to pay advance tax as a certain percentage of their profits to be adjusted against future tax liability. The other measures suggested include avoidance of double taxation on dividends, opening up of the insurance sector and the formulation of a long term fiscal policy. It is argued that such a policy will enable corporates to plan their business operations in advance.

The action plan has also called for a clear and transparent foreign direct investment policy leaving minimum scope for a case by case approach and the implementation of the Rakesh Mohan Committee report on infrastructure.

Other suggestions for improving the capital market include introduction of forward contracts, and allowing investment of 10 per cent of PF, pension funds and funds in charitable trusts in the capital market.