New Delhi: Government's immediate priority is keeping the investment cycle going, Finance Minister P Chidambaram told the industry which asked the Centre not to consider imposing higher taxes on high income individuals.
"...there are some positive signs in the economy but no discernible trend so far," Chidambaram said during his pre-Budget consultations with industry and trade here.
According to an official release, the Finance Minister said both domestic and foreign investments are not an option but an economic imperative for the government.
"...immediate priority of the government is to keep the investment cycle going," he said. The Cabinet Committee on Investment has been constituted to resolve inter-ministerial issues and to speed-up the clearances of projects, he added.
The industry asked the government not to consider imposing higher tax on high income individuals, saying it would discourage entrepreneurship, while seeking continuance of the existing tax rates.
It also cautioned the government against imposition of Inheritance Tax and said such a step would penalise savings and investments and discourage capital formation.
"A higher rate of tax on high income group taxpayers is uncalled for as this would discourage entrepreneurship. It could lead to professionals relocating to low tax domiciles such as Singapore," FICCI President Naina Lal Kidwai said.
Assocham President Rajkumar Dhoot said: "Our opinion is tax them (the rich) but tax them reasonably. They have money and with that money they invest in the country, which generates jobs."
On the issue, CII President Adi Godrej said: "We have said any increase in taxes (on rich) will create a negative perception on investment and therefore should be avoided."
EEPC Chairman Aman Chadha said definition of MSME sector should be changed so that sector could get more investments. The MSME sector is eligible for priority sector lending. Referring to Good and Services Tax (GST), Kidwai said the Centre should reach out to states and come out with a clear plan of implementation and timing at the earliest.
Mahindra & Mahindra Chairman Anand Mahindra said "his (Chidambaram) specific request to the industry was to provide ideas by which investments could be revived, both foreign and domestic."
On the issue of inheritance tax, PHDCCI Past President Sandip Somany said the industry feels that economic environment is not conducive for imposition of this tax. Som Mittal (NASSCOM, Ashwin Dani (Asina Paints), Tulsi R
Tanti (Suzlon Energy) and Aman Chadha (EEPC) were some of the other participants.
The release further said that the suggestions of the trade and industry include, present rates of excise and service tax, 2 percent interest rate subvention for all sector of exports, 25 percent accelerated depreciation for investment in plant and machinery and unutilised assets of Public Sector Enterprises be monetized and revenues generated be used for investment in infrastructure.