Sunday,
November 3, 2002, Chandigarh, India
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Kelkar for 1 lakh as IT exemption limit, 2 slabs New Delhi, November 2 The Task Force has underlined the need for bringing in the tax net agricultural income to check laundering of non-agricultural income causing a revenue loss of Rs 1000 crore. As regards the slabs of income tax, 20 per cent should be for income between Rs 1 lakh and 4 lakh annually and 30 per cent for anything above Rs 4 lakh per year. The Task Force headed by the Vijay Kelkar, Adviser to the Finance Minister, felt the rates of corporate tax should be reduced from the existing level of 36.75 per cent to 30 per cent for domestic companies and from 40 per cent to 35 per cent for foreign companies. Further, it suggested the exemption of long-term capital gains on equity and elimination of minimum alternate tax (MAT). The Task Force was emphatic that all exemptions barring the one for handicapped should be scrapped. Listing the details of the recommendations made by the Task Force which submitted its report to Finance Minister Jaswant Singh here today, Mr Kelkar emphasised that the “exemption raj” in the taxation system should end. This had become imperative because exemptions lead to leakages, unaccountability and lack of transparency, he observed. Stressing that the suggestions for reducing tax would be revenue neutral, Mr Kelkar maintained that the recommendations of the Tax Force should be implemented in toto for ensuring its effectiveness. The Task Force had drawn pointed attention for setting up a tax information network (TIN) to speed up the modernisation. TIN would assess the tax deducted at source of all tax payers, process advance tax and refunds. The government could outsource National Securities Depository Ltd’s hardware and software infrastructure. It had also desired a two-slab system of duties on the Customs and Excise side while doing away with most exemptions and fixed a two-year framework for implementation. Responding to questions, Mr Kelkar said the agricultural income of non-agriculturists was increasingly used as tax shields for laundering funds. To tax these incomes, the states could pass a resolution under Article 252 of the Constitution authorising the Centre to impose tax on agricultural income. All such taxes collected by the Centre could be assigned to the states. For this purpose, a separate tax return form must be prescribed for tax payers deriving income from agriculture. Mr Kelkar said these measures could help additional resource mobilisation by the states without touching 95 per cent of the genuine farmers. About the reforms proposed on personal income tax, Mr Kelkar said dividends received by individuals were proposed to be fully exempt. The Task Force had suggested phasing out tax sops for housing loans. Mr Kelkar said amendment to the Income Tax Act had become necessary to simplify procedures and allow appeal against all orders and intimation imposing additional burden on tax payers. For improving collections, banks should be networked with TIN for receiving payments online besides instant accounting of tax collections and digitised TDS returns. |
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