A government-appointed tax panel yesterday recommended major cuts in India's tax and duty rates to boost consumer spending and spur economic growth.
The panel's recommendations, if accepted, would make processed food, gas, air conditioners and cars cheaper. Corporate taxes would also fall, and shareholders would be allowed to retain a larger part of their capital gains.
"We have proposed several fundamental changes in the duty regime, which can bring about significant changes in the overall economy in the coming years," said Vijay Kelkar, head of the panel and adviser to the Indian finance minister.
Many of the recommendations are expected to be included when Finance Minister Jaswant Singh unveils next year's budget in February.
The panel has suggested reducing excise duties on cars and air conditioners from 32 percent to 20 percent, a 5 percent cut in import duties on petroleum crude and oil, and excluding lifesaving drugs and medical equipment from any duties.
The panel seeks to open Indian industries to more competition from foreign companies through a softer import duty regime. Industry groups nonetheless welcomed the report, saying it aims for a modern tax structure.
It wants Indian companies to pay tax at a 30 percent rate, down from the current 35 percent. The tax rate for foreign companies should also be lowered to 35 percent in phases from the current 48 percent, the panel said.
RSS