FICCI submits 15-point agenda for Budget 2007-08

New Delhi, Nov 19: Industry body FICCI has scripted a 15-point fiscal agenda which can put India on a 9-10 per cent growth trajectory.

In its pre-budget submissions to the government, FICCI has suggested the setting up of an 'empowered committee' consisting of the representatives of Central and State Governments at the earliest to finalise the structure of goods and services tax (GST) and the roadmap for its implementation.

''FICCI believes that replacement of multiple taxes by GST will increase the tax GDP ratio by two years. GST will significantly improve the competitiveness of Indian industry by eliminating the cascading effect of taxes on production cost,'' the chamber said.

It also demanded lowering of excise duty from the current level of 16 per cent to 14 per cent in 2007-08 and later reduced to two per cent. The two per cent reduction in excise duty with consequential lower incidence of state and local taxes will result in a three to five per cent reduction in prices. This in turn, according to FICCI will increase the demand for manufactured goods leading to higher industrial growth and reduced inflation.

The government should allow higher foreign equity in telecom, insurance, pension and other similar sectors to mobilise additional resources for infrastructure investment.

It should continue tax incentives to promote and encourage employment generation, savings, investment and infrastructure development, FICCI said.

It also recommended 100 per cent tax holiday for all industrial undertakings for the 10 consecutive years at any time during the first 15 years after the commencement of production or operations.

Corporate tax rate should be brought down to 25 per cent which would be in line with the rates prevailing in other Asian countries, with which the government is endeavoring to align, it added.

It also demanded the withdrawal of fringe benefit tax (FBT) and reduction of divident distribution tax to 7.5 per cent in the budget for the next fiscal.

Advanced economies of Western Europe, North America and Far East have a share of service sector in their GDP ranging from 60-80 per cent. ''In the context of its potentiality for still higher growth, it is important that this sector is suitably motivated and encouraged through fiscal measures and procedural hassles causing hindrances in its growth removed.'' FICCI said.

All the services should be brought under the purview of tax net, barring basic essential and public utilities. However, considering the need to promote exploration and production (E&P) sector, the government could consider exempting it from service tax, it added.

UNI