JVs shouldnt be assessed separately: Assocham

New Delhi, Nov 28 | Updated: Nov 29 2004, 05:30am hrs
The Associated Chamber of Commerce and Industry of India (Assocham) wants the government to permit joint venture (JV) partners to consolidate their share of profits into the account of their parent companies. Assocham has suggested this measure for assessment purpose under the Income Tax Act, 1961.

Assocham president Mahendra K Sanghi has said that in an era when JVs are emerging an important vehicle for companies to pool their resources together, the I-T Act treats such JVs as an Association of Persons for assessment purposes. Mr Sanghi said this in a statement.

According to him, JVs should not be assessed separately if the government wants JV projects to increase. JVs are quite often project-specific entities, and involve pooling expertise, resources, manpower and equipment, he pointed out.

It is the JV partners that eventually transfer their profit consolidation to their parent companies, he said. Therefore, the parent companies should be assessed for the economic gains that their JV partners accrue to them, according to Assocham.

The chamber is also of the view that corporate tax rates are still quite high and that they need to be rationalised. From the current level of 35%, the rates should be lowered to 30%, according to Assocham. Such a move will lead to better compliance and add to revenues in the longer run.

Assocham has also sought increase in exemption limit under Section 80L to Rs 20,000.