The industry is in favour of eliminating tax exemptions, as recommended by the Kelkar task forces on direct and indirect taxes in the draft consultative reports, according to the latest snap poll of chief executive officers conducted by the Confederation of Indian Industry.

The poll also showed that the top CEOs in the country would rather have the exemptions done away with in a phased manner than in one single step.

Given a choice between the current tax regime and the one suggested by the Kelkar task force on direct taxes, 81 per cent of the respondents chose the latter.

The main features of the corporate direct tax regime, recommended by the Kelkar committee, are elimination of deductions under Sections 10A, 10B and 80IA, 80IB, elimination of the tax on long-term capital gains on equities, elimination of the dividend tax, synchronisation of the depreciation rate under the Income Tax Act with that under the Companies Act, and a reduced corporate tax rate of 30 per cent.

While 17 per cent of the respondents chose to continue with the existing corporate tax structure, 2 per cent could not say which of the two options they would like to have.

On the individual tax front, the majority of the respondents (89 per cent) were in favour of implementation of the Kelkar task force recommendations that incorporate elimination of rebates under Section 88, elimination of exemptions under Section 10, elimination of dividend tax and standard deductions and a hike in the exemption limit to Rs 100,000.W

While 19 per cent of the respondents felt that there should be a complete elimination of exemptions in the forthcoming Union Budget 2003-04, the majority (81 per cent) stated that it should be done in a phased manner.

Asked about the prospects of the Indian economy at the macro level, 81 per cent of the respondents stated that in the current year the economy would grow at 5-6 per cent.

The remaining 19 per cent were of the opinion that the growth would be less than 5 per cent. This is in line with the CII's forecast of 5.4 per cent GDP growth for the current year.

For 2003-04, although 62 per cent stated that the growth would remain in the same range, 33 per cent felt that it would cross 6 per cent.

Around 86 per cent of the respondents were of the opinion that the robust industrial growth exhibited in the first half of the financial year would continue in the second half too.

However, when asked whether the spurt in industrial growth has led to a corresponding increase in the profit margins, there was a mixed response.

While 24 per cent of the respondents said they had experienced a significant rise in the profit margins, 43 per cent said the rise was moderate.

Almost 32 per cent revealed that the industrial growth had not translated into greater profit margins for their companies.

On the prospects at the micro level for individual companies, 73 per cent of the respondents stated that they expected a growth of 10-20 per cent in sales in the current financial year.

Around 10 per cent expect sales to post a growth of 20-40 per cent, and 5 per cent expect the growth to be above 50 per cent. Only 12 per cent expect it to be less than 10 per cent.

A large majority (70 per cent) of the respondents have stated that the growth in profits for the current financial year would be 10-20 per cent.

Around 11 per cent forecast a growth of 20-30 per cent and 8 per cent felt that the growth in profits would exceed 50 per cent.