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Corporates look forward to lower tax rates

By Our Special Correspondent

NEW DELHI FEB. 12. With the acceptance of the Kelkar Committee recommendations on tax rates being the main focus of interest in the coming budget, a survey by the National Council of Applied Economic Research (NCAER) has found that there is great expectation within the corporate sector that reductions in personal income tax rates would be announced by the Finance Minister, Jaswant Singh.

The NCAER survey found three-fourths of the respondents were optimistic that the income-tax rates would be lowered while opinion was divided whether reduction in corporate tax rates would also be announced. In the case of corporation tax, opinion was evenly divided between `most likely' and `somewhat likely' while 12 per cent of the respondents felt that a reduction was unlikely.

In the case of indirect taxes, about 38 per cent of the firms felt that introduction of two-slab customs duty was most likely while 50 per cent felt it was somewhat likely. Only 11 per cent felt that the change over to the two-slab system was unlikely. The survey also found that most companies expecting a shift to the two-slab system were large consumer durables companies with Rs. 100-500 crore turnover. As for the two-slab excise duty structure, a larger proportion of firms felt that it was somewhat likely.

The survey also found that an overwhelming 80 per cent of the firms expected the public sector disinvestment target to go up in the coming budget, despite the fact that earlier attempts, including the disinvestment target set in the 2002-03 budget, remained unsuccessful in meeting the set targets.

On interest rate expectations, the survey found that about 21 per cent of the firms felt that the rate of interest on short term borrowing would be 9 per cent or lower. Also, nearly 70 per cent of the firms felt that the present rate of interest on medium term borrowing at 12 per cent would ease in the coming months.

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