The latest CEO-CII snap poll has revealed that the industry is for the elimination of the tax exemptions, as recommended by the Kelkar Committee in it's draft consultative reports on direct and indirect taxes. However, the poll also showed that the top CEO's in the country would rather have the exemptions done away with in a phased manner than in one single step.
Given a choice between the current tax regime and the one suggested by the Kelkar Committee on corporate direct taxation, 81 per cent of the respondents chose the latter. The main features of the corporate direct taxation regime recommended by the Kelkar committee are elimination of deductions under Section 10A, 10B and 80IA, 80IB, elimination of tax on long term capital gains on equity, elimination of dividend tax, synchronisation of the depreciation rate under the Income Tax Act with that under the Companies Act and a reduced corporate tax rate of 30 per cent. While 17 per cent of the respondents chose to continue with the existing corporate tax structure, 2 per cent could not say which of the two options they would like to have.
On the individual taxation front, the majority of the respondents (89 per cent) were in favour of implementation of the Kelkar Committee recommendations that incorporate elimination of rebates under Section 88, elimination of exemptions under Section 10, elimination of dividend tax and standard deductions and a hike in the exemption limit to Rs. 1 lakh.
While 19 per cent of the respondents felt that there should be a complete elimination of exemptions in the forthcoming Union Budget 2003-04, the majority (81 per cent) stated that it should be done in a phased manner.
In the backdrop of the appreciation in the US $ Rupee exchange rate, the majority of the respondents (54 per cent) felt that this phenomena would have a moderately negative impact on Indian exports. 19 per cent were of the opinion that the impact would be significant and only 27 per cent stated that there would be no impact. On the import front, while 51 per cent of the respondents were of the opinion that the appreciation in the exchange rate would have a moderately positive impact, an almost identical percentage (49 per cent) felt that there would be no impact.
On the prospects at the micro level for their individual companies the majority of the respondents (73 per cent) stated that they expected a growth of 10-20 per cent in the sales figures in the current fiscal. 10 per cent expect sales to post a growth between 20-40 per cent, and 5 per cent expect sales growth to be above 50 per cent. Only 12 per cent of the respondents expect growth in sales to be less than 10 per cent.
The majority (70 per cent) of the respondents have stated that growth in profits for the current fiscal would be between 10-20 per cent. 11 per cent forecast a growth between 20-30 per cent and 8 per cent felt that growth in profits would exceed 50 per cent. 11 per cent of the respondents were of the opinion that growth in profits would be less than 10 per cent.