Date:02/03/2007 URL: http://www.thehindu.com/2007/03/02/stories/2007030202080500.htm

Tamil Nadu - Chennai

Trade bodies flay budget proposals

Special Correspondent

"Extending MAT and widening of FBT to cover ESOP will send wrong signals to corporate sector"

"Hike in dividend distribution tax will dampen stock market"

"Service tax on renting of immovable property will hit trade"

CHENNAI: Several chambers of commerce in Tamil Nadu have criticised the budget for its proposals extending the Minimum Alternate Tax, levying Fringe Benefit Tax on Employees Stock Option, and increasing the rate of Dividend Distribution Tax (DDT).

In a press release, Hindustan Chamber of Commerce president G. Subramanian said extending the MAT and widening of the FBT to cover ESOP would send wrong signals to the corporate sector. The increase in the dividend distribution tax would dampen the stock market operations.

He said the budget should have laid greater impetus on infrastructure development and there was little to enthuse income tax payers beyond the marginal increase in the basic exemption.

The Chamber, however, appreciated the budget for its focus on welfare schemes and education.

"Growth-oriented"

Andhra Chamber of Commerce president Baboolal P. Rathore said it was a growth-oriented, moderate, tax payer-friendly budget and the proposal increasing the threshold limit for service tax would benefit the small service providers.

The Finance Minister, he said in a press release, could have avoided levy of service tax on renting of immovable property and works contract as it would have an adverse impact on trade and industry.

Tamilnadu Chamber of Commerce and Industry said it hailed the various steps announced in the budget to bring down the rising prices of essential commodities.

Increase in

education cess

Sindhi Chamber of Commerce president Gurmukh Kinger said the reduction in the excise and customs duties, to curb inflation, would not benefit the common man. The reduction would be diluted and offset by the increase in the education cess, widening of the service tax and increase in the DDT.

The Chamber welcomed the impetus in the budget on agriculture, rural development, health and water.

President of the Tamil Chamber of Commerce S. Santhanam hailed the budget proposals saying that it touched all sectors.

"Not forward looking"

"It is not a forward looking budget as far as the hospitality sector is concerned. We expected more incentives and concessions on par with the Information Technology sector. But, there is no special impetus provided to the hotel industry," said M.P. Purushothaman, president of the South India Hotels and Restaurants Association.