FM may cut indirect taxes

NEW DELHI, Dec 24 (UNI) — Finance Minister Yashwant Sinha today said that major initiatives to rationalise the indirect tax structure would be introduced in the Union Budget for 1999-2000.

This would be as part of the initiatives which the government intends to take to minimise the gap between direct and indirect taxes.

"Major initiatives would be taken in the next Budget to rationalise the indirect tax structure. We will be restructuring the rules and regulations governing them," Mr Sinha said while addressing the annual session of the PHD Chamber of Commerce and Industry (PHDCCI) here.

"When we have taken steps to restructure direct taxes, why can not we do the same with indirect taxes," he added.

Mr Sinha stated that the government would meet its budgetary targets in direct taxes even as it was experiencing a shortfall in indirect tax receipts. He admitted that irrationalities existed in the tax structure and a solution was possible only through a consensus across all sectors.

The Finance Minister further stated that immediate steps needed to be taken to recreate confidence among small investors and bring them back to the capital markets. "If we bring the small investors back, we can bring back the buoyancy which we had witnessed earlier."

He stated that though the savings rate was growing, the money was not flowing into the capital. Rather, it was being invested in small investment programmes with government security. "This increase in investments in small savings has put an added pressure on the fiscal deficit. This has happened because over a period of time, we have created a situation where people have lost confidence. We have to now jointly ponder over how to recreate this confidence and bring them back to the capital markets."