New Delhi, Feb 26 (Calcutta Tube) Industry organisations Friday hailed Finance Minister Pranab Mukherjee for his ‘fine balancing act’ in presenting a development-oriented budget for 2010-11 but expressed disappointment at the hike in the Minimum Alternative Tax (MAT) and excise duties.
The industry has been demanding cut in MAT from the current 15 percent to 10 percent, while the government in the budget 2010-11 has increased it to 18 percent. MAT is a tax that has to be paid by the companies that are enjoying tax benefits or tax exemption under various schemes.
‘By and large, the finance minister has provided a stable tax and policy framework for the Indian economy to move forward. However, the industry is disappointed that the finance minister has raised the MAT rate from 15 percent to 18 percent when industry was demanding a cut down to 10 percent,’ said Harsh Pati Singhania, president of Federation of Indian Chambers of Commerce and Industry (FICCI).
He said the impact of excise duty hike across the board coupled with increase in excise duty on petrol and diesel will add pressure on the price line in current circumstances.
However, he appreciated the need for some fiscal correction. On introduction of Goods and Services Tax (GST) and Direct Tax Code (DTC) from April 1 next year, Singhania said the time given for introducing it was too little.
Director general of Confederation of Indian Industry (CII) Chandrajit Banerjee said the finance minister has done a fine balancing act.
‘It is visible in the budget proposals where, on the one hand, he has clearly set the roadmap for fiscal consolidation by setting the targets for fiscal deficit reduction over the next three years, raising resources for capital expenditure by setting disinvestment targets and partially rolling back the excise duty stimulus,’ he said.
‘On the other hand, he has set the stage to address productivity issues in agriculture, putting more disposable income in the hand of aam aadmi, to ensure positive environment for growth,’ he added.
Another industry organisation, the Associated Chambers of Commerce and Industry of India (Assocham) said the finance minister has ‘performed the most balancing act under the given circumstances’ by partially rolling out the stimulus package.
‘The finance minister has performed the most balancing act under the given circumstances by partially rolling out the stimulus package and at the same time paid adequate attention for development of the social sector and more specifically so for the rural sector,’ said Assocham president Swati Piramal.
She also welcomed announcements for bringing in more and more services under the purview of service tax while not tinkering with its existing ceiling rate of 10 percent.
‘The budget proposals will bring in more money in the hands of individuals as several good measures have been introduced in the Finance Bill in the form of tax reliefs to the general public,’ she said in a statement.
The Assocham also welcomed a deadline set for introduction of Goods and Service Taxes (indirect taxes) and Direct Tax Code.
‘These would be major tax reforms which will not only provide tax relief to people and industry but also help the government realize higher tax collections,’ she added.