Pre-budget consultation: Industry seeks simpler capital gains tax regime

For salary, CII suggested normal slab rates, 30% for lotteries and horse race winnings and 2% on other payments.
Representative Image.
Representative Image.

NEW DELHI: Industry bodies have emphasised the need for simplicity, consistency and rationalisation of capital gains tax regime. In a pre-budget consultation with revenue secretary Sanjay Malhotra, industry bodies like the Confederation of Indian Industry (CII), FICCI and Assocham have suggested that capital gains tax regime should have a broader bucket of two-three asset classes, and accordingly rationalise the holding periods, indexation benefit eligibility as well as tax rates.

The CII has suggested rate of 10% as long-term gains tax rate for financial assets and 20% (with indexation) for assets other than financial assets like immovable property etc, and 15% as short-term capital gains tax rate for financial assets. It also recommended 12 months as holding period for turning long term in case of financial assets and 36 months for assets like immovable property.

The industry bodies asked for simplification of TDS compliances. FICCI suggested that there be only three rate structures for TDS payments – TDS on salary at slab rate, TDS on lotteries/online games etc at maximum marginal rate and two standard rates for TDS for different categories. CII said the government to consider laying down a road map for reducing the disparity in TDS rates by having only two or three categories of payments and a small “negative list” of payments which will not be liable to TDS. For salary, CII suggested normal slab rates, 30% for lotteries and horse race winnings and 2% on other payments.

CII has also proposed to expand Dispute Resolution Scheme (DRS) to mid and large taxpayers, starting with Transfer Pricing assessments, and incorporating global mediation best practices.

In addition, it sought higher RoDTEP rates for exporters, full product coverage, direct benefit transfers, and new scheme for service exports. CII proposed to implement a phased cut in duty rates over 3 years, lowest/negligible duty to raw materials, moderate duty to intermediates, and standard duty to final goods.

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