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ICAI suggests 4-tier IT slab, 30% corporate tax
January 21, 2003 13:13 IST
Institute of Chartered Accountants of India has suggested a four-tier income tax structure for individuals, abolition of surcharge, a 30 per cent corporate tax and a scheme for taxing agriculture income by putting it in the Union List.
In a pre-Budget memorandum to Finance Minister Jaswant Singh, ICAI also sought elimination of limits on deductions on provisions for bad debts of banks, financial institutions and non-banking finance companies, besides abolition of cumulative conditions under Customs and Central Excise Act for approaching settlement commission.
In contrast to Kelkar panel's suggestions of three-slab IT structure for salaried class, the institute has asked for tax exemption up to an income of Rs 100,000.
It suggested 10 per cent tax for income of Rs 100,000-200,000, 20 per cent for Rs 200,000-400,000 and 30 per cent for above Rs 400,000, apart from doing away with the surcharge.
The apex institute recommended that firm and corporate tax should be brought down to 30 per cent, as corporate tax had always remained at par with the maximum marginal rate.
Notwithstanding the resistance from the ruling National Democratic Alliance allies and Bharatiya Janata Party to tax agriculture income, ICAI said there should be a scheme for imposing tax on such incomes.
"Many people show huge agriculture income in the tax returns and there is no mechanism to verify whether such income has suffered tax under the relevant state law. The time has come that the power to tax income from agriculture is in the Union List," it said.
However, the Centre should levy and collect the tax and the revenue should be distributed among the states, ICAI said, adding, "A beginning could be made by granting exemption limit of Rs 3,00,000 separately for agricultural income."
In case of assessees having non-agriculture income of more than the basic exemption limit and declare agriculture income of over Rs 100,000, a prescribed book of accounts for checking tax avoidance should be maintained, it said.
On suggestions for abolition of limits of deduction of provisions towards bad debts, ICAI said, "Once the banks make a provision for doubtful debts as per prudential norms and the audited accounts reflect such a provision, the entire provision should be allowed as a deduction."
On the other measures to widen the tax base, it asked for "compulsory" permanent account number on the air-ticket booking, especially when such foreign travels was organised as package tours.
Notified professionals like accountants, architects, company secretaries, engineers, film artists/actors, cameramen, directors, singers, lawyers, medical practitioners and technical consultants, should be required to file return of income.
On recommendations relating to indirect taxes, ICAI said the cumulative conditions prevailing under the Customs and Central Excise Act should be done away with for approaching the Settlement Commission.
"The pre-Finance Act 2000 status regarding application to Settlement Commission should be brought into force," it said.
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