Bouquets and brickbats

Mumbai: Dr Vijay Kelkar, adviser to Indian Finance Minister Jaswant Singh, in his report on tax reforms, produced a mixed bag of proposals that received both bouquets and brickbats from various quarters.

In the report, he diluted some of his earlier controversial proposals, but retained others. While he retained the proposals to eliminate income-tax exemptions and bring agricultural income into the tax net, he diluted the earlier proposal to do away with tax exemption on housing loans.

On the plus side, he recommended that there should be only two basic rates for income tax. The first slab will be at 20 per cent for income from Rs 1-4 lakh and the second at 30 per cent for income above Rs 4 lakh.

In addition, the report recommended a hike in the income-tax exemption limit to Rs 1,50,000 per annum for senior citizens and widows. For others, the exemption limit has, in the report, been raised to Rs 100,000 from the current Rs 50,000.

Also on the plus side, the report recommended doing away with tax on dividend distribution and long-term capital gains on listed stocks. Dividends also need not be taxed at the hands of the shareholders or unit-holders, the committee has said.

On the minus side, the committee recommended knocking off almost all the tax rebate schemes under Section 88 and tax deductions on interest income under 80 L.