Look, Who Are Backing Kelkar On Tax Sops Elimination -- CEOs

New Delhi, December 22: | Updated: Dec 23 2002, 05:30am hrs
There is almost total consensus in the industry favouring elimination of tax exemptions, as recommended by the Kelkar committee in its draft consultative reports on direct and indirect taxes, but would prefer to see it in a phased manner rather than in one single step. This was revealed in a snap poll of chief executive officers (CEOs) conducted by Confederation of Indian Industry (CII).

Over 80 per cent of respondents preferred the corporate direct tax proposals of the Kelkar Committee rather than the current tax regime. The main features of the corporate direct taxation regime recommended by the Kelkar committee are elimination of deductions under Section 10A, 10B and 80IA, 80IB, elimination of tax on long term capital gains on equity, elimination of dividend tax, synchronisation of the depreciation rate under the Income Tax Act with that under the Companies Act and a reduced corporate tax rate of 30 per cent.

There was unanimous approval of the proposals on the individual taxation front. These incorporate elimination of rebates under Section 88, elimination of exemptions under Section 10, elimination of dividend tax and standard deductions and a hike in the exemption limit to Rs 1 lakh.

CEOs see the economy growing at between 5 and 6 per cent in the current year, but 33 per cent of respondents believe it could cross 6 per cent in the following year.

Slightly over half the respondents feel the strengthening of the rupee would have only a moderately negative impact on exports, but a few felt the impact could be considerable. Even for imports most felt impact would be only moderately positive.

While 86 per cent of respondents see industrial performance to stay on its growth path, only 24 per cent felt there was a corresponding rise in profitability. 32 per cent revealed that this growth had not translated into greater profit margins for their companies.

On the prospects at the micro level for their individual companies the majority of the respondents (73 per cent) stated that they expected a growth of 10-20 per cent in the sales figures and profitability in the current fiscal.

The respondents to the poll included, amongst others, Sanjiv Goenka, Rahul Bajaj, HM Kothari, YC Deveshwar, Anu Aga, Ratan Jindal, Madhur Bajaj, Jamshed J Irani, Rajesh Shah and Jamshyd Godrej.