Firms expect simpler, not higher taxes

Corporate India does not expect tax rates to change this year. The industry is looking forward to Finance Minister P Chidambaram further simplifying and rationalising tax laws in the Budget this year.

While the industry does not expect Chidambaram to come out with major initiatives, it expects some relief on the fringe benefit tax norms.

A survey of 200 companies by the consulting firm, Grant Thornton, says greater emphasis is expected on infrastructure development to boost growth.

The industry expects the finance minister to come out with some sort of a social security scheme in the Budget, although only 40 per cent of the respondents expect Chidambaram to implement the EET (exempt, exempt, tax) model on savings this year.

Forty-six per cent of the respondents suggest that the finance minister should focus on widening the tax net to increase revenue.

While not expecting any move forward on FDI in public sector banks, 68 per cent of the respondents feel that FDI hike to 74 per cent in insurance will finally materialise in this year's Budget.

In information technology, 76 per cent of those surveyed expect service tax exemption on input services for software technology parks. As much as 88 per cent of the respondents expect an increase in customs on commercial vehicles thus indicating a very pro-domestic auto industry stance.

Besides an import duty relief on life saving drugs, the pharma industry expects relief on costs of filing international patents through a weighted deduction. Sixty-four per cent of pharma industry respondents expect deduction for in-house R&D to be extended up to 2010.