The Hindu : Capital market to get a boost

Online edition of India's National Newspaper
Sunday, Dec 29, 2002

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Capital market to get a boost

By Our Special Correspondent

NEW DELHI Dec. 28. A majority of trade and industry bodies have welcomed the final recommendations of the Kelkar committee as positive and expressed the hope that they would go a long way in rationalising the tax regime.

Vinod Chandiok, national president of the Indo-American Chamber, welcomed the suggestions on rationalisation of the direct taxes as they would pave the way for making the tax structure simpler and linear.

Though the impact of various suggestions could be discerned only after detailed analysis, he said it appeared that the final recommendations had taken into account various representations and were generally a step in the right direction.

"It is important that some degree of dynamism is inducted in the tax provisions and income-tax used more as a fiscal policy measure and not as a measure to dictate economic policy," he said, expressing the hope that the suggestions relating to reforms of the tax administration, particularly with respect to "accountability", would receive due consideration and be implemented by the concerned authorities.

The Indian Chamber of Commerce and Industry (ICCI) said that the recommendations would go a long way in making the tax structure simpler, linear and easy to comply with.

In a statement, it said that in the case of personal taxes, the emphasis on lower rates, lower liability and greater equity augured well.

"The elimination of tax on dividends and long-term capital gains on equity of listed companies will help boost the capital market."

The recommendation to lower corporate tax from 36.5 to 30 per cent was also in line with the prevailing rates in most developed countries, it said.

On indirect taxes, the ICCI noted that the Kelkar panel had recommended scrapping of the SAD on imports.

This would make imports of goods, particularly capital goods, cheaper.

Also welcome were the committee's efforts to motivate introduction of the VAT by the States by offering compensatory arrangements.

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