New Delhi: The government should phase out all cesses and surcharges on taxes and securities transaction tax, fringe benefit tax and introduce a new income tax code, the Economic Survey said on Thursday.
The Survey, tabled in Parliament on Thursday, also called for reviewing commodities transaction tax, which was proposed in the Budget for 2008-09 but not notified.
“Review and phasing out of surcharges, cesses and transaction taxes (such as CTT, STT, FBT). Incentivise states to do the same with respect to stamp duties,” the survey said.
The Survey also asked for rationalising the dividend distribution tax so that dividend is taxed in the hands of receiver.
Surcharge at a rate of 10% is levied on those earning at least Rs10 lakh per annum and corporate income tax.
Industry is demanding removal of the surcharges to make calculation of corporate taxes simple and increase disposable income of people.
Education cess is levied at the rate 3% on taxes. Besides, cess at the rate of Rs2 per litre is levied on petrol and diesel to fund national highways, rural development and state roads.
As regard STT, equity investors pay 0.125% for every transaction in cash for the delivery of shares.
Transactions in derivatives trading attract a lower STT of around 0.017%.
Markets have been demanding removal of STT.
FBT, which was introduced in the 2005-06 Budget, taxes many perquisites disguised as fringe benefits and escape tax. It is levied at the hands of employer.
Industry has been demanding either removal of FBT or its rationalisation.