Don't bring new taxes in Budget: India Inc

New taxes could dampen spirit of investors or create negative perception

India Inc today urged the government to keep the tax rates low in the Budget for 2013-14 to give a push to investments. It also advised against introducing any new tax such as an inheritance tax or a tax on super rich.

In a pre-Budget meeting with Finance Minister P Chidambaram, industry representatives also said the government should provide a stable regulatory regime through the upcoming Budget.

It was suggested that nothing in budget should dampen the spirit of investors or create a negative perception.

“There should be no new taxes. We want to make sure that the investment cycle returns. Inheritance tax is a bad idea. Any additional tax can change the sentiment back,” Ficci President Naina Lal Kidwai told reporters after a two-hour long meeting with the finance minister.

CII President Adi Godrej said a tax stimulus would be required. He said GDP growth, and not higher taxes, would lead to higher tax collections.

“Inheritance would create negative sentiment. No country has it,” Godrej said, adding the Budget should not create a negative perception like it did last time.

The industry also appealed to the finance minister to go for an early roll-out of the Goods & Services Tax, arguing it was critical for the industry as well as growth of the economy.

Chidambaram said immediate priority of the government was to keep the investment cycle going. He said that both domestic and foreign investments are not an option but an economic imperative for the government. He said there are some positive signs in the economy but no discernible trend so far.

The finance minister also said that the Cabinet Committee of Investment (CCI) is constituted to resolve inter-ministerial issues and to speed-up the clearances of projects.

Various other suggestions were made by the representatives of trade and industry such as the government may allow 2% interest rate subvention for all sector of exports, allow 25% accelerated depreciation for investment in plant and machinery for pre-defined period of 3-5 years, unutilised assets of Public Sector Enterprises be monetized and revenues generated be used for investment in infrastructure.

Suggestions also included acceptance of the recommendations of the Kelkar Committee Report, disinvestment process starting from the beginning of financial year rather than in the end, deregulation of diesel, no tax on transactions in Commodity Exchanges, unlocking money struck in tax litigation, and providing tax benefits to MSME sector.

“I said we want a predictable regulatory environment.  Auto industry shouldn't be treated as a golden goose which can be taxed,” Mahindra Group Chairman Anand Mahindra said.

About 16 representatives representing different organisations participated in the meeting.