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FM hints at tinkering with tax rates to boost economy

Hints at amending indirect tax rates in the interim Budget

February 4, 2014 4:31:04 am

Finance minister P Chidambaram today hinted that indirect tax rates may be amended in the interim Budget scheduled on February 17 provided they don’t require any amendments in the laws. However, the government will not take up any major legislation for passage during the forthcoming Parliament session pending political consensus.

The indication comes amid declining industrial output, dismal performance by key infrastructure industries and falling investments. While the index of industrial production dipped 2.1 per cent during November, the core sector grew only 2.1 per cent during December. The economy is expected to grow below 5 per cent during the current fiscal.

“We cannot propose amendments to the Income Tax Act, Customs Act or the Excise Act. But any proposal short of amending a law can be made. We can also outline vision for the future… We have made a couple of changes last week. We will continue to make those changes until the term of this government if they do not require Parliamentary legislation or sanction. We will have to notify the changes and place the notification in Parliament,” Chidambaram said while addressing a press conference before the Parliament session begins February 5.

Last week, to protect domestic steel industries, the finance ministry imposed a 5 per cent duty on iron pellets.

This would be the last session of the 15th Lok Sabha and the government will present an interim Budget or, what is called, a vote-on-account this year. Full budget will be presented by the new government after the general elections. Calling for a debate on the interim budget, the finance minister said, “I will be disappointed if there is no discussion on the vote-on-account”.

With regard to key reform bills including Insurance Bill and GST, he said they are unlikely to be taken up in the forthcoming session due to lack of political consensus.

“In the Insurance Bill they (opposition parties) have made it very clear it will not pass it (in the upcoming session),” he said, adding that there is no consensus among states on the Goods and Services Tax (GST).

While GST envisages complete overhaul of the existing indirect tax regime, the Insurance Bill seeks to raise FDI cap in the sector from 26 per cent to 49 per cent. The direct taxes code is also unlikely to come up for discussion given the fact that this last session will have only 12 sittings.

On the Sebi amendment Act, which envisages powers for Sebi to crack down on illegal collective deposit schemes, the minister said, “(it) is very high on the priority list. I pointed out the bill was promulgated twice.”

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