Industry should take the marginal rise in MAT in ‘right spirit'
NEW DELHI: With Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee holding firm on not rolling back the increase in excise and customs duties on petroleum products, Revenue Secretary Sunil Mitra on Wednesday ruled out any changes in the tax proposals in the budget pertaining to these items while maintaining that the increase in MAT (Minimum Alternate Tax) from 15 per cent to 18 per cent would also stay.
In his keynote address at a post-budget seminar organised by the Associated Chambers of Commerce and Industry of India (Assocham) here, Mr. Mitra pointed out that with an effective corporate tax rate of about 22 per cent and incentives to the common man and industry for higher consumption as well as savings, no roll back in taxes would be possible.
The top priority of the Finance Minister, Mr. Mitra said, was fiscal consolidation and growth which necessitated generation of additional revenue. By rolling back the fiscal stimulus extended to the petroleum sector, the government would be able to generate Rs.26,000 crore as revenue in 2010-11.
He reiterated that the hike in excise and customs duties would not fuel inflation in the long run. On the contrary, the two duties would be absorbed because food inflation was mainly on account of supply-side constraints.
At the same time, he admitted that headline inflation could go up marginally in the short-term.
Referring to the MAT issue, the Revenue Secretary pointed out that the government had not only relaxed the surcharge on corporate tax but also raised the rebate on personal income-tax substantially. The impact, he said, would be that the consumers would have greater purchasing power and also have the option to go in for savings. In this scenario, Mr. Mitra said that industry should take the marginal increase in MAT in the “right spirit”.
Instead of seeking its reduction, the industry, he said, should help the government move on to the path of higher growth and ensure prudent fiscal consolidation.
In his remarks, CBDT Chairman S.S.N. Moorthy disclosed that till recently, the Finance Ministry had disbursed Rs.42,000 crore as income-tax refunds to eligible taxpayers in 2009-10 as against refund benefits of Rs.28,000 crore for the entire previous fiscal year. He said the board create a special monitoring cell so that refund benefits were not delayed and tax compliance increases as per the Budget estimates for 2010-11 for an amount of Rs.430,000 crore.