FM rapped over tax ordinance

Finance Minister Jaswant Singh was hauled over the coals in the Rajya Sabha by the Opposition for issuing an ordinance over an item of financial legislation, despite having the time and the opportunity to pass the Bill in Parliament.

Speaking on the Taxation Laws (Amendment) Ordinance 2003, which was turned into amendments to the Income Tax Act, Wealth Tax Act and Expenditure Tax Act, Congress party member Pranab Mukherjee said the Opposition had no serious difference with the government on interest exemption to Nordic Bank, reducing interest rates on the refund on advance tax deposited by corporates, giving wooden handicraft in Special Economic Zones (SEZ) the same tax exemptions as other items, and tax concessions to the shipbreaking industry.

However, Mukherjee said it was not a healthy precedent to bring this kind of a legislation through an ordinance because this curtailed the power of the legislature and vested it with the executive.

Jaswant Singh, on the other hand, defended himself saying he had tried to bring in the legislation in the monsoon session but was unable to do so because the House was seized with political issues.

He also explained that many of these issues were raised by various sections of society and put up to him by the department of economic affairs, after the passage of the Finance Bill.

Singh said the concessions to the shipbreaking industry were important because they would help divert business from Karachi to Alang, the largest ship-breaking yard in the world.

The rate of interest on refunds given to those who had paid advance tax was necessary, because big players "had a tendency to pay large amounts of advance tax only because of the high rate of interest".

He also said it was important to give incentives to manufacturers of wooden handicraft. Congress MP Subbirami Reddy raised the issue of taxation changes for the liquor trade. Jaswant Singh said "the liquor trade was prone to collecting illegal money". He said the government had decided to stop this and tax breweries at source at the rate of 10 per cent of the exit value of the brewery.