"I have informed the Congress and the United Progressive Alliance members that I am willing to put my thinking cap on to look for an alternate way of addressing the problem, which I may have addressed in a different way," he said at a post-Budget seminar organised by the Federation of Indian Chambers of Commerce and Industry
. "The purpose of the tax (Rs 10 on a withdrawal of Rs 10,000 in one day) is not to generate revenue but to prevent tax evasion. Huge cash withdrawals is a problem as they distort the health of the economy. We have found one way of dealing with the problem. If this is not acceptable, we will find another way," he said, adding that he was not stubborn in dealing with the problem but stubborn in achieving the objective.
On the issue of the fringe benefit tax, the minister reaffirmed that the government had no intention of taxing legitimate business expenses. "I have no intention of going back on what I said in 1997," he said, adding that he had asked his officers to look into the chapter to see if unintended anomalies had crept in, which could be corrected.
He urged industry to wait for the final shape of the Finance Bill, which will contain some amendments.
He said everybody stood to benefit by the direct tax reforms announced in the Budget and hoped that the increased benefit would translate into more savings and investment to fuel growth in the economy.
"We have been careful to ensure that all we do stimulates growth, stokes the fire in the belly of the entrepreneurs, promotes increased investment especially in infrastructure and keep the engine of growth purring and humming. I assure you that policies will remain stable so long as we are in the government, for the next 4-5 years," he said.
Referring to the change in tax slabs and the exemption limit, Chidambaram said, "Everybody's pocket has more coins now. I hope that what I have given will be spent. I will especially urge housewives, the homemakers, to spend at least 60 per cent and save 40 per cent."
The minister urged industry not to seek tax incentives alone as a means to achieve growth. "Is tax incentive the only way to stimulate growth for an industry?" he asked in response to a request by the tourism sector to be given infrastructure status.
"Why don't you build roads in rural areas, provide telephone connectivity and build hotels in backward areas. I will help you get credit from banks and I won't ask for a share of your profits," he said. He said the Budget had taken the process of Customs duty reduction forward and rationalised the excise structure in order to converge excise rates with the Cenvat.
"At present, the Cenvat rate is 16 per cent and hence the convergence of excise has to be with this rate, but we will consider this (16 per cent Cenvat) as we go along. Whatever the Cenvat rate is, excise will have to be converged with it," he said.
While a general tax on goods and services was an eventual aim of the government, Chidambaram said industry must work to ensure that value-added tax is implemented from April 1.
The minister said there would be no negative impact of the reduced depreciation. Calculations had been done on depreciation under the old regime and the new regime, which showed that at the end of five years, the internal accrual to a company were matching, he said.
Chidambaram said the Government had not announced a reduction in stamp duty since it was a matter pertaining to states.
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