New Delhi, July 2 (Inditop.com) Introducing a new income tax code, reforming existing tax structure and duties, slashing subsidies on fuel, fertilisers and food were some of the measures suggested by the Economic Survey 2008-09, released here Thursday.
The survey, tabled by Finance Minister Pranab Mukherjee in parliament, called for creation of a new income tax code to bring about a neutral tax regime – a tax structure where deductions are consistent and there are no incentives or exemptions from tax.
Among other tax reforms, it was suggested that taxes like fringe benefit tax (FBT), commodity and security transaction taxes be done away with. It also called for the implementation of the goods and services tax (GST) by April 1, 2010.
Rationalisation of the dividend distribution tax (DDT), which in its current form results in double taxation, is another major proposal of the survey.
The survey, which is an annual report card on the state of the economy and provides suggestions on the road ahead, also sought the removal of the inverted duty structure – a mechanism where taxes increase as a product goes through the manufacturing cycle, with inputs attracting the least taxation rate and finished product the highest.
The dismantling of the inverted tax structure would bring down prices of domestic manufactured goods and make Indian industry globally competitive.
Adopting an aggressive reformist approach, it called for a huge reduction in various subsidies prevalent on fuel, fertilisers and food. Prominent among them are:
– Limit subsidy on cooking gas to six to eight cylinders per household
– Kerosene subsidy only for non-electrified, non-cylinder homes
– Provide fertiliser subsidy directly to farmers
– Convert production subsidies into direct consumer subsidies
– Review customs duty exemptions and move to uniform duty structure
