Scrap separate chapter on I-T exemptions: ICAI

New Delhi, January 25: | Updated: Jan 26 2002, 05:30am hrs
The Institute of Chartered Accountants of India (ICAI) has urged the finance ministry to amend the Income Tax Act in order to do away with chapter VI-A which deals with sectoral exemptions for special economic zones, export-oriented units, software, charitable trusts and individual savings.

ICAI president ND Gupta told The Financial Express that the institute had written to finance minister Yashwant Sinha that there was no need for a separate chapter on exemptions and its withdrawal would address the rationalisation needs of the tax administration structure. The institute argued that if exemptions had to be given, it could be done under the relevant accounts rather than incorporating it in a separate chapter, Mr Gupta said.

The recommendation does not form a part of the pre-budget memorandum but has been made in a follow up letter to the minister.

Other important suggestions for simplification of tax rules made by the institute include that a clarificatory rule must be introduced in the income tax rules, 1962, specifying the scope and manner of publishing accounts for charitable institutions.

In respect of amalgamations and de-mergers expenditures incurred after April 1, 1999 on legal charges and other incidental accounts, including stamp duties, are allowed to be deducted over a period of five years in equal installments.

ICAI has recommended that the deduction should not be spread over five years but should be allowed in one year. In order to give full effect to the Reserve Bank of India’s prudential norms to allow deduction in case of bad and doubtful debts in banks, financial institutions and non-banking financial institutions, the institute has recommended that there should be no cap on deductiblity of the provision.