Financial Daily from THE HINDU group of publications
Thursday, Jan 02, 2003
Financial Daily from THE HINDU group of publications Thursday, Jan 02, 2003 |
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Industry & Economy
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Taxation ICAI opposes exemption on long-term capital gains K.R. Srivats
NEW DELHI, Jan. 1 THE Institute of Chartered Accountants of India (ICAI) has said that the Kelkar Committee's recommendation on exempting long-term capital gains on listed equity from taxation is "not advisable" as it may lead to abuse of the exemption in more ways than one. "Litigation will be rampant on deciding whether the gain derived is from shares held as `investment' or from shares held as `stock-in-trade'. If one particular source of income is accorded tax exemption, the tendency will be to modify the colour of income and route it through the source of income which is exempt," ICAI has said in its response to the Kelkar Committee's report on Direct Taxes. ICAI has also held that the Kelkar Committee has rightly recommended abolition of tax on dividend so as to avoid double taxation. "Such a measure is sufficient to boost the stock markets," the institute, which regulates the chartered accountancy profession in the country, has said. It has also suggested that removal of tax exemptions under Section 10A and 10B can be prospective without upsetting the existing clients. "For instance, Section 10A and Section 10B operate with the sunset clause up to assessment year 2010-11. Those who are already operating on the premise of these benefits may not be deprived before the sunset clause. Those who commence the units in future can be disqualified even for the unexpired period," ICAI has said. A suggestion has also been made that the "rebate under Section 88 can go for all outgoings except life insurance premium, housing loan repayment, long-term savings and recognised welfare fund contribution over which the assessee employee has no control." ICAI has also said that standard deduction for salaried class should be continued, as there is an element of expenditure that needs to be allowed instead. The Kelkar panel had recommended elimination of standard deduction (taxing the gross earnings).
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