Tax revamp for petro, telecom, sugar: FM

Two months ahead of the budget for 2005-06, finance minister P Chidambaram today promised to make the tax structure simpler for the petroleum, telecom, sugar and textile sectors.

"What is common among textiles, petroleum, sugar and telecom is a convoluted tax structure. We have to unravel it and make it simpler and investment-friendly. We will come up with a strategy in the next budget," Chidambaram said at FICCI's AGM today.

The government has set up a committee, headed by chief economic advisor Ashok Lahiri, to streamline the duty structure of petroleum products and a report is expected shortly.

On textiles, Chidambaram said the government had announced a simpler tax regime for natural fibres, and the next budget would attempt to unravel the tax structure for man-made fibres.

The finance minister also indirectly favoured phasing out of subsidies, saying a dole-led, subsidy-led, concession-led growth is not sustainable. "What is sustainable is investment-led growth," he said.

Y K Modi, outgoing predident of FICCI, suggested a slew of fiscal measures including a cut in corporate tax rate to 30%, remodelling income tax slabs, lifting of surcharge and education cess, and toning up the tax system to raise industry and services sectors' growth rates to over 11% and pushing up agricultural growth to 4%.