The Hindu : Business : Budget proposals likely to drive consumer demand

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Budget proposals likely to drive consumer demand

Special Correspondent

Income-tax exemption limit may be enhanced, says survey

Reworking of corporate tax slab suggested
Higher allocation for social sector expected

NEW DELHI: Over 90 per cent of the CEOs surveyed ahead of the Budget 2008-09 have exuded confidence that Finance Minister P. Chidambaram is likely to enhance the income tax exemption limits in the backdrop of impressive rise in tax revenues and the necessity to give boost to consumer demand which needs to be insulated from the global slowdown.

Unlike last year, when the income tax exemption limit marginally increased by Rs. 10,000 from Rs. 1 lakh, the CEOs expect significant hike in the threshold for all classes of assessees, including women and senior citizens, according to the findings of a survey of 185 CEOs by Assocham Business Barometer (ABB) released here on Wednesday.

Commenting on the analysis, Assocham President, Venugopal N. Dhoot, said that the rise in tax exemption limits might be accompanied by rejig in the income tax slabs. At present, income up to Rs. 1,10,000 is exempted from income tax in the case of individuals while the exemption limit is Rs. 1,45,000 in the case of women and Rs. 1,95,000 in the case of senior citizens.

While the CEOs wanted 30 per cent corporate tax slab should start only from Rs. 5 lakh income, they felt that the Budget might not be that generous given the fund requirement for various social sectors in the last year of the government. However, 72 per cent of them were expecting rejig in the tax system in the coming budget. C. Rangarajan, Chairman of the Economic Advisory Committee to Prime Minister, has also suggested that the slab should be reworked.

Certain manufacturing sectors like colour TVs, tyres, chemicals and textiles face the problem of inverted duty structure wherein the custom duty on raw material is higher than the rate applicable on the import of finished products.

Most of the survey respondents were confident of higher budgetary allocations for the social sectors like education, health and rural development.

With the upward pressure on global prices of crude oil, resulting in huge losses for the oil companies in India and potential of pushing up the inflation rate, industry leaders are expecting a restructuring in the tax structure imposed on the import and refining of oil.

A common view is that the budget proposals may give boost to the consumer durables sector whose production has declined by 1.3 per cent in April-December 2007 as compared to a healthy 11.2 per cent growth in the previous year.

Over 76 per cent of the ABB respondents were anticipating a reduction in the excise duty from 16 per cent to 12 per cent.

The textile industry would get adequate incentives in this year’s budget as the sector is hit due to increased competition in the export market due to rupee appreciation.

This has resulted in the closure of many textile units and unemployment in the sector.

According to the 89 per cent of the CEOs, the government is most likely to announce sops for the industry.

Also, the budget allocation under the Technology Upgradation Fund Scheme (TUFS) and the scheme for Integrated Textile Park Scheme (SITP) may be increased.

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