Ahead of the Budget, Prime Minister Manmohan Singh today sent out a clear signal that the government was not in favour of a tax regime that had “too many exemptions” and, that as India seeks to be member of a “wider Asian economic community”, Indian industry should “no longer seek excessive protection through tariffs”.

Speaking at the annual general meeting of FICCI today, while expressing satisfaction on the progress made on introducing value-added tax in states, the PM said in the “long run, our tax regime should not have too many exemptions” as this makes administration “an unnecessarily complex exercise vulnerable to misuse”.

This statement from the PM comes at a time when several individual ministries, along with industry, are seeking tax exemptions and waivers in order to promote growth in their respective sectors.

According to the PM, the “tax regime should be liberal, but equitable” but at the same time it should be “transparent and not subject to excessive administrative discretion”. However if there is “transgression”, it must be “visited upon by predictable action”, the PM said.