Ficci wants change in Wealth Tax Act

From abolition to modification. The Federation of Indian Chambers of Commerce and Industry has made another representation to the revenue secretary regarding amendments in the Wealth Tax Act.

From abolition to modification. The Federation of Indian Chambers of Commerce and Industry (Ficci) has made another representation to the revenue secretary regarding amendments in the Wealth Tax Act. This time around, it no longer seeks the abolition of the Act, but recommends that the definition of the term ‘unused urban land’ under Section 2(ea) be made more comprehensive.

Currently, the Act exempts land acquired for ‘industrial use’ from Wealth Tax. Ficci wants the exemption to be extended to land acquired for ‘business use’ as well, so as to embrace construction of BPOs, KPOs, warehouses, cinemas, schools, hospitals, hotels and other infrastructure crucial to economic development.

Ficci also says the two-year period for construction from the date of acquisition needs to be extended to five years. There could be a number of impediments, which might have to be sorted out before starting construction. The 10 year period for holding land as stock-in-trade, should exclude any period of delay — such as litigation — which is beyond the control of the developer.

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Ficci adds that vacant industrial land earmarked for future expansion should be outside the purview of the Act. Moreover, residential accommodation provided by a company to its employees drawing salary exceeding Rs 5 lakh should be outside wealth tax net. A company is under compulsion to provide accommodation to its employees if its office or factory is located in a remote area. Ficci says such property should be treated as a non-productive asset.

Earlier, Ficci had suggested abolition of Act, as it contributed a meagre Rs 250 crore to the exchequer, and the cost of collection, assessment, compliance and appeals did not justify its existence.

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