Pranab Mukherjee takes first step to reform political funding

New Delhi July 6 (ANI): Union Finance Minister Pranab Mukherjee proposed to allow 100% deduction in the computation of donor, in the donations given to electoral trusts with a view to reform the system of funding of political parties.

Pranab Mukherjee also proposed to abolish fringe benefit tax on the value of certain fringe benefits provided by employers to their employees, during budget speech in Lok Sabha today.

Mukherjee also proposed to extend the sunset clauses for deduction in respect of export profits under Section 10A and 10B of Income Tax Act (IT Act) by one more year, however he has not mentioned any changes in corporate tax rates.

Tax exemptions are largely profit link under the present scheme of the IT Act and such incentives are inherently inefficient and liable to misuse and therefore, Mukhrejee proposed to incentivise businesses by providing investment linked tax exemptions rather than profit-linked exemptions, and

For greater equity, under the Minimum Alternate Tax (MAT), Pranab Mukherjee proposed to increase the rate of MAT to 15% of book profits from the present rate of 10%. However, to give relief to corporate taxpayers, he also proposed to extend the period allowed to carry forward the tax credit under MAT from 7 years to 10 years. In order to incentivise the corporate sector to undertake Research and Development work.

Mukherjee proposed to extend the scope of the current provision of weighted deduction of 150% on expenditure incurred on in-house R and D to all manufacturing businesses except for a small negative list.

On the basis of recommendation of Prime Minister's Economic Advisory Council, Pranab Mukherjee proposed to abolish the Commodity Transaction Tax (CTT) introduced in the Finance Act 2008. (ANI)