He also ruled out any reduction in corporate tax rates unless exemptions were removed saying the effective tax rate in India was already very low.
"The effective tax rate is not only moderate but very moderate. The effective tax rate in India is 19.2%. Show me one Asian country, one ASEAN country that has an effective tax rate of less than 19%," he asked India Inc at the post-budget interaction today.
Reiterating his point that it is not the scheduled rate but the effective rate that matters, Chidambaram said if exemptions are removed the effective tax rates would rise and there would be scope for moderation of tax rates.
Responding to a suggestion from a member that a committee should look into moderation of corporate tax rates, he said: "While I welcome your offer to join a committee to examine what the moderation would be, that committee should also examine how effective tax rate can rise to the ASEAN level."
He said the removal of 10% surcharge on corporate tax for small firms and companies was an indication that the government wants moderate taxes. "Twelve lakh small firms and companies have been immediately given relief of 3%. That's an indicator of the line we are pursuing for the future - we want taxes to moderate, we have moderated taxes. The moderation has applied this year to small firms and companies," he said.
Chidambaram also said that the government was not resorting to price control in the cement sector, and invited industry players for talks on duty differential measures announced in Budget 2007-08.
"We are not reinforcing price control," he said at the meet while referring to the issue of duty differential proposed for the cement sector.
The budget reduced excise duty on cement by Rs 50 from Rs 400 per tonne if it is sold at Rs 190 per 50 kg of bag, but raised it by Rs 200 per tonne on higher retail price.
"The government owes responsibility to the people of India to moderate prices where prices seem to have risen unreasonably. Whether they have risen unreasonably could be discussed. If they have risen unreasonably, the government surely has an obligation to moderate prices," he said.
He asked cement industry players to discuss the proposal among themselves and with the government as well.
The government's plea to cement players seems to have fallen on deaf ears as manufacturers raised prices by around 6% a day after the Budget was announced.
Pointing out that moderating inflation is good for all, Chidambaram said the opportunity to take profit in the short-term should not cloud the thinking that in the long-term price stability is a fundamental feature of a sound economy.
He also wondered as to how tax on employee stock option could take away a company's ability to retain talent, and asked the companies to give inputs to the government to calculate the rate at which ESOPs should be taxed.