India Inc on Wednesday came out strongly against the proposed move to tax the super-rich, saying the move would discourage entrepreneurship and lead to professionals relocating to low tax domiciles such as Singapore, Dubai or London. Industry bodies such as CII, FICCI and Assocham also sought faster implementation of Goods and Services Tax and continuance of the prevailing corporate tax rate, while cautioning the government against imposing inheritance tax.
Citing the slowdown in the country's GDP growth, FICCI cautioned in a pre-Budget meeting with finance minister P Chidambaram against damaging the confidence of the investor community, which has already been shaken badly on account of last year's amendments on retrospective tax.
“The government should not fuel the black economy by increasing tax rates,”said Naina Lal Kidwai, President, FICCI. Adi Godrej, President, CII, has said that the objective of the Union Budget should be to revive growth, given the current economic situation.
The maximum marginal tax rate of 30% on personal income should be made applicable for income above R20 lakh, as against the existing threshold of R10 lakh, FICCI said in its recommendations. CII President Adi Godrej said, "We have said that any increase in taxes (on rich) will create a negative perception on investment and therefore should be avoided. Lower rates of taxes have been known to give higher collection. Absolute collection should increase.”
Assocham President Rajkumar Dhoot said, "Nowhere in the world this happens. Our opinion is tax them (the rich) but tax them reasonably. The investments from the rich men also give excise duties, sales tax and hence generate revenues also.”
FE had reported that with little options left to increase revenue productivity, the finance ministry is weighing various options that won’t directly hit the common man, but would accelerate revenues from high net worth individuals (HNIs).