Budget should eliminate dividend tax, but raise savings limit

New Delhi, Jan 1 (UNI) The Confederation of Indian Industry(CII) today presented its wish list to Finance Minister P Chidambaram for Budget 2007-08, demanding withdrawal of dividend tax, abolishing MAT, raising the savings limit from Rs one lakh to Rs two lakhs, rationalisation of Fringe Benefit Tax and incentivising technology development.

Given the fact that households are the largest savers, the CII wanted the Finance Minister to focus on raising the level of personal savings. India has one of the highest savings rate and yet to sustain a growth rate of eight per cent, it was essential to hike this from the present 25 per cent or so to 32 per cent, experts say.

The pre-Budget memorandum said the limit of savings needs to be raised from the current level of Rs one lakh to Rs two lakhs. A reason for the high level of savings by the middle classes is not only the feeling of security, but also the decent interest rate offered on administered savings. But above all there are growing surpluses with these people, linked to their prosperity.

The CII wanted the benefits of savings to be raised by taking recourse to Section 80C.

The Confederation called for simplification of direct tax structure. There needs to be one rate for Corporate Tax rather than many, CII said and added that surcharges have no place in a modern tax structure.

As the day of Budget presentation gets closer, Corporate Houses and their associations start dishing out their agenda to the Finance Minister.

This is now an annual drill or a ritual as some would say. How much of it actually finds place in the Budget is a moot question.

This year is no different from others and the first to make public their views and requirements are the apex chambers.

The CII was the first to shoot out its pre-Budget memorandum today, listing the irritants in the way of India Inc, whose party is on a high steam on the very first day of the new year. Thanks to rising Corporate profits, double digit manufacturing growth and the fact that India Inc has come into its own, the rising flow of outward FDI being a testimony to this.

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