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Bring down corporate tax by 5% immediately: FICCI

PTI - New Delhi

Apex industry association FICCI has asked the government to cut corporate tax by five per cent in the next budget (2003-04) from the prevailing level of 35 per cent as a part of efforts to enable industry to compete globally.

In its pre-budget memorandum, Federation of Indian Chambers of Commerce and Industry said "If domestic industry is to compete effectively globally, it is imperative that it should be governed by laws and regulations, which are globally competitive and tax rates are also in tune with other nations of the world."

The government must also come out with a firm policy regarding surcharge and must consider withdrawal of the existing surcharge of five per cent levied on both domestic and foreign companies, it said.

"Resort to such measures frequently results in unwarranted additional burden on taxpayers and discourages voluntary compliance," it said adding "surcharge has to be a temporary measure and not for financial requirements of a general nature."

Suggesting that small companies should be taxed at a still lower rate of 20 per cent, it recommended need for appropriate incentives for replacement of existing plants and machineries as the available incentives were not adequate.

Increased investments in the core areas is the key to industrial growth, it said adding there are various methodologies by which investments can be encouraged.

"Restoration of investment allowance/development rebate needs to be relooked. Introduction of technology upgradation allowance can also be considered whereby a certain percentage, profits be allowed to be set apart for exclusive utilisation in evolving new technologies." it said.