The Government, in the last budget had tried to impose service tax on a host of professionals including architects, interior decorators, chartered accountants, cost accountants, company secretaries, credit rating agencies, and slaughter houses. However, the imposition on tax on certain professional groups, was withheld and on few others, especially chartered accountants, it was withdrawn.

In the coming fiscal, the revenue secretary indicated that the department would do its utmost to apply service tax on all the group of professionals in a bid to widen the tax net. He addedthat the objective was aimed to be achieved by "developing a friendly mechanism" which would make the compliance easier. He hoped that the department would soon be able to come out with the modified guidelines in this regard.

While referring to revenue targets in 1999-2000, Chaudhary said that these were realistic taking into account expected buoyancy and the measures announced by finance minister in his budget speech. He also justified the imposition of the 10 per cent surcharge on direct taxes.

He said that "the steps taken in the last two years have already widened the direct tax net substantially. Infusion of computerisation in the whole system has brought in new vigour and we are trying to capitalise on that," Chaudhary said.

Referring to the suggestion that the 1,500 sq ft limit on the housing projects in cities other than Delhi and Mumbai availing a tax holiday should have been done away with to avoid splitting of apartments into parts, Chaudhary said that the benefit was meant for the low andmiddle class persons only.

"The fiscal provisions giving tax exemption to housing caters to the needs of up to the middle class level only. The upper limit has been raised from 1,000 sq ft to 1,500 sq feet to suit the target group."

Chaudhary also said that the Rs 75,000 interest exemption cannot be raised as the government was trying to raise the housing stock of the country by making more people capable of having their own residential accommodation.

"Those who are already income tax assesses had the capability to built houses and they cannot be given an exemption. This is need-based assistance and not financial apartheid and it is for self-occupied houses only," he said.

The time limit imposed for availing the exemption from interest payment up to Rs 75,000 on housing loans has been done to avoid speculations and interference of real estate agents, said Chaudhary. The benefit is applicable for the houses completed by April 1, 2001 only.

Chaudhary added that the rural housing schemes cannot becombined with rural employment schemes as they are only subsistence programmes. "Rural housing schemes announced in the budget would meet the requirements up to a great limit," he said.

Stressing on the utility of deduction of expenditure on Y2K correction from tax assessment for the next financial year, Chaudhary said that the demand for making the decision effective from April 1, 1998 was uncalled for.

"According to our information, very few people have put in money last year to make their systems Y2K compatible. The corporates are not serious about Y2K yet. The exemption is expected to push them in this direction," he said.

Chaudhary felt that the proposed exemption on the income from a UTI unit or other mutual funds similar to the exemption in respect of dividends received from domestic companies was much-needed simplification for the common investor. "The decision would clear many doubts and apprehensions from the minds of the small investors," he said.

Justifying multiple taxation on thedividends of multi-layer investment companies, Chaudhary said that the Government would give benefits to only those investments related to the enhancement of production. "The investments made for interest accumulation/speculation don't deserve tax benefits. We don't need to encourage such investments," said Chaudhary.

Chaudhary also said that the proposal to limit tax on long term capital gains at ten per cent under income tax act only for the shares and securities listed in recognised stock exchanges was to bring the whole system at par with that of NRIs. "The scheme is very attractive for resident Indians, especially those selling their assets shortly after completion of one year. Earlier, they had to pay 15 per cent on such investments."

"We have to keep in mind the existing situation in which small investor has lost confidence in in the market, and therefore, it is better to start with listed companies only", he said.

Government, however, "is not averse to investment in unlisted stocks andsecurities. But, they won't get any exemption as their is high risk involved in such investments," he added.

The revenue secretary pointed out that in the indirect tax area, after rationalisation of tax structure, next step of the government would be to remove anomalies in the duty on raw materials vis-a-vis intermediate and finished products. "These steps have been postponed because the government didn't want to take too many risky initiatives at one time. But, this would be the top priority for next budget," Chaudhary said.