The Hindu : `Tax proposals, a continuation of reform process'

Online edition of India's National Newspaper
Sunday, Mar 03, 2002

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National

`Tax proposals, a continuation of reform process'

By Our Special Correspondent

NEW DELHI MARCH 2. The Revenue Secretary, S. Narayan, today said that the tax proposals mooted in this year's Union Budget were a continuation of the reform process initiated in the previous years and reaffirmed the Government's commitment to move ahead with them.

Defending the proposals by presenting an overview of the compulsions that cast their shadow on the budget, he said the expected recovery in the fortunes of industry had not materialised in spite of the Government having conceded a number of ``give-aways'' to the corporate sector in the last year's budget. Mr. Narayan, who was speaking at a workshop organised by the CII on ``Tax Implications of the Union Budget 2002-03'', said last year the Government had announced cuts in both the tax and tariff rates in order to provide a fillip to investment and consumption and stimulate demand in the economy. But that did not happen as the growth in the industry failed to pick up, resulting in huge revenue shortfall.

He said the give-aways to the corporate cost Rs. 16,000 cores in revenue. They included reduction in 15 per cent surcharge, curtailment in withholding tax on dividend from 20 to 10 per cent on the direct tax front and abolishment of the 24 excise rate and a reduction in the 40 per cent rate to 32 per cent on the indirect tax front.

In spite of the revenue shortfall, the Government has demonstrated its commitment to continue on the path to reform and stick to the reforms in the tariff structure even in the face of growing fiscal deficit, he asserted adding that, among the indirect taxes, the withholding tax had now been completely removed and tax would be levied in the hand of the recipients.

Terming this continuity of policy as a significant part of the budget, he said the budget had not put any additional charge on the corporate sector. Further an attempt has been made to boost growth through increase in the Plan expenditure by Rs. 18,000 crores. Referring to the announcement about working towards a two-rate customs duty, he invited the industry to suggest a roadmap for rationalisation of the 600 odd customs duty lines. The Government, on the excise duty, front would try to move towards reducing the other items attracting 32 per cent rate to 15 per cent in an effort to reduce the number of exemptions.

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