CII seeks 15% excise rate, abolition of zero duty import

The confederation also urged the Union government to abolish zero duty import. It said that the status quo be maintained in the customs tariff and the peak tariff should be 40 per cent.

For projects with zero customs duty, CII felt that 10 per cent basic customs duty and 4 per cent special additional duty with deemed export benefits should be imposed.

The chamber suggested thatexcise clearance should be allowed since refund of terminal excise duty takes a very long time and domestic suppliers should be allowed to quote in any foreign currency.

CII recommended that the special additional duty (4 per cent) should be continued and its base expanded to include core sectors and traders. According to the confederation, special duty (2 per cent plus 3 per cent) should be allowed to lapse on March 31 this year as per the sunset clause provided in the Union budget 1997-98.

The confederation also recommended that the modvat restrictions of 95 per cent should be removed and 100 per cent modvat should be restored.

CII said that the government should concentrate on a move towards value-added tax system — one at the central level and the other at the state level.

On indirect taxes, CII felt that restrictions and inter-state barriers should be eliminated to facilitate free trade.

On direct taxes, CII urged the government to widen the tax base by covering commercial activities of theagriculture sector, agriculture income above Rs 5 lakh, as well as the income from private tuitions, coaching classes, exhibitions by individuals and boutiques.

The confederation’s recommendations concerning direct taxes included: reintroduction of investment allowance at the rate of 25 per cent of the cost of plant machinery in the Income-tax Act; insertion of a provision in the Income-tax Act for avoiding multiplicity of tax with regard to dividend income; withdrawal of the restriction of eight years on carryover of unabsorbed depreciation; removal of unintended dilution of benefits under Section 80 HHC, allowing tax deductions to foreign exchange earners and extension of benefits of Section 80 HHE to the profits of the overseas branches of such software exporters.

The chamber also felt that the domestic companies should be at par with NRIs and FIIs and be subject to 10 per cent capital gains tax, introduction of the concept of carry backward of business losses, freeing import of technology andrelaxation of $2 million currently.