Nov 16, 1999|
Income Tax concessions on the chopping block
The reforms pertaining to income and corporate tax are entering into the second phase. In the first phase, tax rates, corporate and income, were rationalised (brought down). Now comes the harder part. The government has set up committees to look into various income tax concessions.
The Finance Ministry has set up 4 committees to study income tax concessions in the areas of exports, information technology, minimum alternate tax and backward area concessions. The committees will also look into whether the objectives of the concessions have been achieved or not.
The aim of the exercise is multifold. The government aims to do away with a number of concessions, which have lost their relevance while at same time rationalising others to better serve the purpose for which they are meant. It also plans to plug the various loopholes that lead to tax evasion. More importantly, by rationalising tax concessions pertaining to the export sector, the government is aiming to come within the ambit of the WTO guidelines. Recently, the European Union has initiated an enquiry into India exports of petrochemical products into the EU accusing the latter of giving hidden subsidies to exporters.
By rationalising the system of tax concessions, the government is also likely to benefit from better tax collections.
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