To encourage more consumption and saving in the economy, the Confederation of Indian Industry (CII) will recommend that personal income tax exemption limit should be increased by Rs 50,000 to Rs 2 lakh and the tax rate slashed by 5 per cent. In its meeting with the finance ministry led by revenue secretary PV Bhide on Monday, the CII will also suggest doing away with the fringe benefit tax and the minimum alternative tax.

As far as indirect taxes are concerned, the CII has sought protection from imports in the backdrop of a global slowdown. The industry body recommends that the peak rate of customs duty should remain at 10 per cent. It has called for a cut in central sales tax (CST) and for ushering in the goods and services tax (GST) on schedule.

CII’s pre-budget memorandum suggests that FBT should be levied only on the element of personal benefit to employees and should exclude the portion meant for pure business. It says that the FBT should not be levied on items such as conference expenses, sales promotion, tour and travel, hotel and lodging facilities and other non-employees related expenses.

On MAT, the CII wants the government to abolish the tax or at least bring down its rate to 5 per cent. In the past, MAT had been hiked from 7.5 per cent to 10 per cent of the book profits. The industry chamber argues that the additional burden has affected investment plans of companies.

This apart, the CII is keen the government abolishes the surcharge and cess on individuals and companies. The surcharge on income tax was initially levied at a nominal rate of 2.5 per cent and the same was quadrupled to 10 per cent. “It will be more efficient to have one rate of corporate tax rather than many cesses and surcharges,” says the pre-budget memorandum.