Today's Paper

`No tinkering with tax rates'

Special Correspondent

Chidambaram to reply to Finance Bill debate in Lok Sabha tomorrow

Tax rates to be "moderate and stable"Import levy: aim is to cut it to about 5 to 10 per centBJP says Minister has failed to tax rich farmers

NEW DELHI: The Government will make efforts to maintain the growth momentum in tax revenues without tinkering with the tax rates every year, Union Finance Minister P. Chidambaram told the Lok Sabha on Saturday.

Moving the Finance Bill, 2006, for consideration and passage as soon as the House assembled, Mr. Chidambaram said the Government intended to send out a clear message that the tax rates would be "moderate and stable" and this was a "year of consolidation".

There was "no reason to tinker or tamper with the tax rates every year," he said, while noting that there were "very few tax proposals or changes this year".

In keeping with the plan to move towards the ASEAN level of Customs duties, "we have moved half a step towards bringing down the rate to 12.5 per cent." The ultimate goal, he said, was to reduce the import levy to about 5 to 10 per cent, as prevailing in the ASEAN economies.

GST regime in four years

Gross revenue was growing at about 20 per cent and this growth momentum has to be maintained, he said. Alongside, as for the Cenvat rate, efforts were being made to bring it to the level of 14-16 per cent. The service tax rate would also be converged and finally a goods and services tax regime would be established in the next four years.

"We have given ourselves a four-year time period. We will be working with the state Finance Ministers on the matter and come up with a road map to have a goods and services tax in the next four years," he said.

Later, during the discussions on the Finance Bill, the BJP said the Budget had disappointed all sections, including industrialists, senior citizens and women.

Initiating the debate, Vijayendra Pal Singh (BJP) said Mr. Chidambaram had failed to tax rich farmers even as he had promised to widen the tax net. The Minister, he said, did not simplify the income tax return system or the Fringe Benefit Tax (FBT) either. The I-T provisions were harsh and merited clarification.

Rupchand Pal (CPI-M) said that despite the low rates of corporate taxes, compliance was not up to the mark. About 500 companies in the country were amassing wealth and netting a profit of Rs. 500 crores each year in view of the exemptions.

The Government, he apprehended, was surreptitiously moving towards a regime to levy tax on small savings at the time of maturity. This, he said, would badly hit senior citizens and their dependents whose only source of income was monthly interest from postal savings.

Mohan Singh (SP) demanded that the Sixth Pay Commission be set up immediately for Central Government employees and suggested that the salaries of MPs also be entrusted to the same Commission. Mr. Singh also noted that the proposal to bring chartered accountants into the service tax net was not justified, especially when lawyers were kept out. It showed the Government's double standards, he said.

The Finance Minister is scheduled to reply to the debate on Monday.