New Delhi, January 2
In a significant development having a bearing on the coming Union Budget, the Bharatiya Janata Party is seriously considering to oppose the contentious tax reform proposals to reduce and eliminate incentives for housing, small savings and standard deductions, pitting Finance Minister Jaswant Singh against his economic adviser Vijay Kelkar.
Party general secretary Rajnath Singh has convened a meeting of his committee on Sunday next to finalise the response to the Kelkar panel recommendations, with some of the “anti-middle class” proposals not finding favour with party functionaries.
“It is a mistake to have appointed Kelkar to head the panel,” a party leader said.
“The party will demand that the tax break of upto Rs 1.5 lakh interest on housing loans be
retained along with standard deductions and incentives for small savings,” he said, adding that the BJP was in favour of doubling the income tax exemption limit to Rs 1 lakh, as the party manifesto had advocated it three years ago.
While the party favoured most of the proposals in indirect taxes, including lowering of customs and excise rates, it was against the proposals to remove the cess on petrol and diesel, saying the cess had helped a great deal in mobilising resources for the ambitious highway project of Prime Minister Atal Behari Vajpayee.
Meanwhile, BJP’s economic cell convener P.N. Vijayan said Mr Kelkar had failed to take into account critical assumptions which needed to be factored in the present context of India’s economic development.
Mr Vijayan, also a member of the Rajnath panel, said it might be true that 85 per cent of the housing loans were less than Rs 5 lakh but in the present circumstances, no middle class family could buy a small flat for less than Rs 12 to 15 lakh, which meant taking a housing loan of at least Rs 10 lakh.
In such a scenario, it would not be prudent to reduce the present concession up to Rs 1.5 lakh interest payment on housing loans, he said.
