Govt Not To Accept Kelkars Word On Farm Income, Small Savings

New Delhi, December 28: | Updated: Dec 29 2002, 05:30am hrs
Within 24 hours of the submission of final reports on direct and indirect taxes by the Kelkar panels to the finance minister, Bharatiya Janata Party (BJP) ruled out the possibility of the government accepting the key recommendations, which include taxing agriculture and eliminating standard deduction and incentives for small savings.

BJP general secretary Rajnath Singh, who is heading the committee set up by the party to study Kelkar panels recommendations, said on Saturday, "The Kelkar panel on direct taxes has recommended that tax rebate on savings should end, but our government would like to encourage savings and cannot agree to anything that would hurt the salaried class. Our government would also in all probability continue with standard deduction."

He added the suggestion of bringing income from agriculture within the tax net will never be accepted by the government.

Meanwhile, disinvestment, commerce and industry minister Arun Shourie while addressing an open house organised by the Federation of Indian Export Organisation (FIEO) assured the exporters that he would "personally" take up with the finance minister the issue of "elimination" of benefits for 100 per cent export-oriented units, units set up in export processing zones and special economic zones under Sections 10A & 10B of the Income-Tax Act, 1961, as proposed by the Kelkar panel on direct taxes.

Mr Singh said, "Nobodys financial interest should be hurt. This is what the prime minister is concerned about and hopefully the finance minister also thinks on the same lines."

Mr Singh also stressed that it is not necessary for the government to accept the Kelkar panels recommendations. He also expressed unhappiness over the fact that the panel did not incorporate the partys suggestions as much as the party expected. He said the committee set up by the party would submit its recommendations in a week to ten days time to the finance minister.

Chairman of the taskforce, Dr Vijay Kelkar, however, reiterated that the tax incidence on account of the panels recommendations on various income groups would be "much less and not more" as claimed in certain quarters.

Quoting official estimates, Dr Kelkar said a salaried person earning Rs 80,000 to Rs one lakh would pay Rs 1,224 less as income tax while a person earning above Rs 10 lakh would pay Rs 69,597 less.

The relief to non-salaried taxpayers ranges from Rs 382 for an income of Rs 50,000-60,000 to Rs 82,946 for persons earning above Rs 10 lakh, he said. For senior citizens, Dr Kelkar said the benefit ranges from Rs 3,402 for income bracket of Rs 1.5-2 lakh to Rs 77,196 for income above Rs 10 lakh.

The industry chambers welcomed the recommendations of the Kelkar panels. The Indo-American Chambers of Commerce president Vinod Chandiok said, "The recommendations, particularly those relating to the rationalisation of direct taxes should make the tax structure simpler and linear".

The Indian Chamber of Commerce and Industry (ICCI) in a statement said the emphasis on lower rates, lower liability and greater equity augurs well. In the case of indirect taxes, the chamber has pointed out that the recommended scrapping of special additional duty (SAD) on imports would make imports of goods, particularly capital goods, cheaper.