PHDCCI calls for neutralising tax structure to facilitate M

By Staff
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Google Oneindia News

New Delhi, Jan 7 (UNI) To bring about tax neutrality and make Indian companies more competitive by facilitating consolidation of businesses, industry body PHDCCI has called for rationalising provisions relating to corporate restructuring.

In its pre-budget memorandum submitted to Finance Minister P Chidambaram, PHDCCI stated Section 72A of the Income Tax Act provides for carry forward and set off of losses of the amalgamating or demerged company/ies by the resulting company/ies.

The benefit of the section is, however, limited to the amalgamation between companies, which fulfil the specified requirements.

PHDCCI suggests that the benefit of section 72A relating to carry forward and set off of unabsorbed losses and unabsorbed depreciation of the amalgamating company be made available in the hands of the amalgamated company in every case of amalgamation and restrictions in section 72A(2) and (7) may be removed.

In its memorandum, PHDCCI has also emphasised that despite buoyancy in tax collection, the effective tax rate for corporates remained at 40 per cent. As the system had matured, the government should lower the tax rates or withdraw surcharge and education cess.

The government should announce a long term fiscal policy to facilitate long term planning by trade and industry to fully exploit the potential of Indian businesses, the body said.

While the share of direct taxes in the total tax revenue of the government was gradually growing and there was a scope for mobilising additional resources, it should be done without increasing the burden of existing assessees, it said.

Rate of depreciation should once again be enhanced to 33.3 per cent specially in view of rapid technological obsolescence.

There is also a need to bring down the compliance costs, which would require revisiting many direct taxes provisions, PHDCCI suggested.

UNI

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