Industry chamber urges Govt to reduce corporate tax to 25%

New Delhi, Jan 9 (UNI) Industry chamber Assocham today urged the government to reduce the corporate tax to 25 per cent from 30 per cent without imposing any surcharge on it and also suggested creation of a committee to finalise Goods and Services Tax (GST) structure at the earliest.

At a pre-budget meeting here, Assocham President Anil K Agarwal appraised Finance Minister P Chidambaram that the replacement of multiple taxes by GST will increase the tax GDP ratio by two per cent with an amount of Rs 70,000 crore per annum.

Apart from providing the revenue buoyancy, the GST will simplify the tax structure, reduce tax administration and compliance cost.

It will also improve the competitiveness of Indian industry by eliminating the effect of taxes on production cost, Mr Agarwal added.

The chamber also stressed that India would need 320 billion dollars worth of investment to upgrade the existing infrastructure to sustain 9-10 per cent economic growth.

It added that although railways are doing well, the worst infrastructure sector such as roads and airports are in bad shape and therefore incentives would be required to spur up investments in these two crucial sectors of the infrastructure.

It also sought creation of common Indian market for growth and competitiveness as it felt that Indian market has been segmented into 29 states market due to non vatable central sales tax and partial tax credit for stock transfers.

Therefore, the chamber recommended that Central Sales Tax (CST) should be phased out without any further delay and brought down to two per cent from April 1, 2007.

The chamber also urged to promote alternate energy sources as it feels that India is heavily dependent on import of petroleum for its energy requirements.

For strategic reasons, India should promote use of alternate sources of energy that are based on indigenous sources of raw material.

In this context, the chamber would emphasise use of bio-diesel which uses indigenous ethanol and is environmental friendly and cheaper.

UNI