Tax panel for budgetary support instead of sops

NEW DELHI: SM Bhatnagar, member secretary, Task Force on Indirect Taxes, on Friday clarified that the Kelkar Committee was against exemptions, but where it was not possible to do away with them, it has proposed to move towards a system of budgetary support to make the entire administration of indirect taxes transparent.
Speaking at a workshop on Kelkar Committee Report on Indirect Taxes organised by Assocham, Mr Bhatnagar said the recommendations were path-breaking as the committee had practically placed the budget proposals before trade and industry.
He said to rationalise existing procedures for customs clearance, the committee had proposed a green channel for all. “We will apply the yardstick of risk assessment across-the-board and do away with the ‘privilege class’ of exporters, who currently enjoy the green channel facility.�
Responding to concerns expressed by Nihal Kothari, chairman, Assocham Indirect Tax Committee, Mr Bhatnagar said both in central excise and customs, the Kelkar Committee had recommended two rates of duties — 8% and 16% — and drawn up a road map for duty rates up to ’05. This rationalisation, he said, would go a long way in bringing about certainty and enable industry to take long-term business decisions.
He said to impart a clear-cut focus to exports, the Committee had recommended reduction in domestic tariff area (DTA) access to 10% by ’05 from the current level of 50%. For export promotion, the committee had suggested the drawback duty route and faster dispersal of drawback. In order to make this work, it was proposed to offer interest to the exporters if the drawback was not credited in their account within 7 days.
Sukumar Mukhopadhyaya, former Member, CBEC, pointed out that the Task Force had deviated from the avowed principles of minimising the number of rates as the numbers of rates continue to be as high as 10 for ’03-04 and 9 for ’04-05.
He said the plethora of options of duty rates in different chapters would lend itself to complications and suggested one rate per chapter.
He said, the levy of central excise based on value addition was conceptually wrong. Value addition is not the taxable event in the case of excise duty. “We cannot go against the constitutional provision that excise is on manufacture.� he said.