Budget Wrap: FM seen widening tax base, super rich tax unlikely

One of the themes that dominated the pre-budget debates this year was super rich tax. As the Budget draws near the opposition to such a tax is getting louder. According to a report in the Economic Times today, a super rich tax is unlikely to come in this budget as “policy makers within the government” favour more discussions before introducing it. These officials have raised concern that such a measure is likely to stymie the already weak business sentiment in the country. Hence Finance Minister P Chidambaram is likely to prefer widening the tax base rather than increasing tax rates, according to the report. Read the full story here. No resolution seen for natural gas taxation issue Taxation of natural gas has been a vexed issue ever since Chidambaram redefined the term “mineral oil” in 2008-09 Budget to exclude the commodity from the seven-year tax holiday. The tax rebate is applicable to crude oil as of now. Oil and gas companies have been asking the government to consider natural gas on par with crude oil, which, they think, will also boost investors’ interest in the sector. [caption id=“attachment_635828” align=“alignleft” width=“380”] The government is leaving no stone unturned in its bid to raise tax revenues. One can’t blame it, because the country’s fiscal situation is precarious. Reuters[/caption] However, the government has not yet taken any step to resolve this anomaly. The companies, according to an Economic Times report today, do not expect Chidambaram to resolve this issue in this year’s budget either. “We can only hope, but the finance ministry is adamant that the matter, which is sub-judice in various IT appellate tribunals, cannot be resolved through the Finance Bill,” a senior executive in an upstream company has been quoted as saying in the report. The Association of Oil Gas Operators also wants the government to increase the tax holiday from the present seven years to 15 years. But they do not see that happening either as Chidambaram’s aim this year is to consolidate on the fiscal side, the report said. Read the full report here. Armed with SC order on Fiat, govt seeks to increase excise mop-up The government is leaving no stone unturned in its bid to raise tax revenues. One can’t blame it, because the country’s fiscal situation is precarious. Latest tool the authorities are using is a Supreme Court order on carmaker Fiat, a report in the Times of India said. A few months ago, the Supreme Court had said that the company should pay excise duty on the price at which the car is usually manufactured and not on the discounted price it was sold. The court order covered period starting from 2007. Based on this order, the authorities have sent tax notices worth hundred of crores to various companies, predominantly in the auto sector, the report said. However, Many car makers, including Tata Motors and Mahindra & Mahindra, have already been served such notices, according to the report. The companies, however, are afraid that this may lead to a “lot of hardships” and even litigations. They expect the finance minister’s budget to bring about more clarity on this issue. Read the full story here.