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Journalism of Courage
New Delhi, Dec 8: Federation of Indian Chambers of Commerce and Industry (Ficci) wants the government to put on hold the phasing out of incentives for exporters, provide a five-year tax holiday for e-commerce companies and introduce further changes in the Companies Act provisions relating to amalgamations and de-mergers.
In its pre-budget memorandum to Finance Minister Yashwant Sinha, Ficci has called for continuance of full incentives to exporters till 2003 and phasing out of export incentives be withdrawn.
In a bid to create a conducive environment for e-commerce to flourish, Ficci has said that a five-year tax holiday be provided to enable the industry to plough back its resources adequately for further development and the phasing out of the tax incentive under Section 80 HHE should also be deferred for some time.
Further, the provisions of capital gains tax should be done away with especially on items like transfer of domain and transfer of other e-commerce applications, Ficci has said.
Ficci has called for the reduction of stamp duties and uniform stamp duties for all states, which have been a stumbling block for corporate restructuring.
On the direct tax front, Ficci has urged the government to bring down the corporate tax from the current level of 38.5 per cent and bring it at par with other tax level in countries like Argentina, Brazil, Finland, Norway, Singapore and Sweden, where the tax rates vary from 25 per cent to 30 per cent.
Ficci has suggested that the benefit of 10 per cent tax on long-term capital gains should be made applicable to all securities whether they are listed on the stock exchanges or not.
The chamber has called for reviving development rebate/investment allowance or introduction of technology upgradation allowance whereby a certain percentage of profits be allowed to be set apart for exclusive utilisation in evolving new technologies. To overcome obsolescence, accelerated depreciation be provided and the rate of depreciation should rise from 25 per cent to 33 per cent to be computed with reference to current market value of assets which would mean revaluation of such assets on a continuous basis.
There is a need to fine tune the export incentive schemes and their nomenclature tailored to make them WTO compatible, Ficci has said. It has further asked to treat deemed exports at par with physical exports and profits arising from deemed exports should be brought within the ambit of section 80HHC.
In respect of mergers and amalgamations, Ficci has said that where financial institutions (FIs) approve any amalgamation/reconstruction, Central Board of Direct Taxes (CBDT) should not impose further stipulations so long as the term set out by the FIs are adhered to. The profits or loss of subsidiary companies should be allowed to be added or deducted from the holding company on the basis of proportionate holding, if the total holding exceeds 51 per cent.
