The Hindu : Recommendations will be improved upon: Kelkar

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Friday, Nov 15, 2002

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Recommendations will be improved upon: Kelkar

By Our Special Correspondent

NEW DELHI NOV. 14. Faced with all-round criticism, including from among the top echelons of the Government, on his proposals for direct and indirect tax reforms, Vijay Kelkar, Adviser to the Union Finance Minister, Jaswant Singh, today said the two task forces which had made the recommendations would "improve" upon them in the final reports.

Dr. Kelkar, who is the Chairman of the two task forces, told presspersons on the sidelines of a FICCI seminar here that what had been made public were just consultation papers and that "we want to improve upon our papers and bring out the final report."

He, however, declined to say whether the final report would dilute some of the harsh measures such as scrapping all tax exemptions for individuals and corporates.

Apart from raising the income tax threshold limit to Rs. 1 lakh a year and some changes in the taxation slabs, the task force on direct taxes had suggested the removal of tax incentives on savings while the panel on indirect taxes recommended far-reaching measures to improve procedures, apart from abolishing incentives to various sectors of the economy. A tax on agricultural income was also recommended.

Apart from criticism from industry and individuals for the proposals, even the BJP has set up a special committee to study the recommendations of the Kelkar reports. The party is apprehensive of the political fallout of the recommendations if they are accepted. The Deputy Prime Minister, L. K. Advani, has also been quoted as saying that Mr.Singh himself had reservations about certain proposals.

Dr. Kelkar, however, favoured the lifting of the indirect tax exemptions saying, "If you want to give incentives, my personal opinion would be to give it through budgetary provisions and not through tax exemptions."

While subsidy could be debated in Parliament and was a more transparent way of offering sops, tax exemptions could not be detected even by the Comptroller and Auditor General, he said.

The consultation papers were presented to Mr. Singh two weeks ago and comments were invited from the public. After considering the views, the Kelkar panel would draw up the final report by December, which could provide the roadmap to the next budget.

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