Mumbai: Amid the growing worries over higher taxes that have roiled the markets, banker Uday Kotak called for a relook at the levy on risk capital saying as much as a whopping 60% of one's income is taken away by government. Kotak, the MD Kotak Mahindra Bank, also called for "steroids" for the auto industry to push up sagging sales, which is very essential for propping up growth.
"I frankly believe that we need to relook at the whole taxation system for risk capital," Kotak said. An majority of companies pay 35.8% in corporate tax, another 21% in dividend distribution tax (effective rate) and an additional 10% if the dividend is over Rs 10 lakh, he said. "Risk capital is taxed at close to 60%. That's an extremely high rate," he said, adding if someone makes handsome gains on the investment, he/she has to pay an additional long-term capital gains tax (LTCG) as well.
The comments by Kotak, the managing director of Kotak Mahindra Bank, come after certain provisions in the budget roiled investors, leading to a massive sell off by foreign investors who have sold more than Rs 13,000 crore of their investments since the budget alone, pulling down the index by over 3,000 point in the month.
"We need to respect all investments, foreign and domestic," he said, adding LTCG was a big spoiler. On the deepening auto sector woes, where narket leader Maruti and others have reported huge sales slump forcing them to resort to massive production cuts, he said there is a need for special "steroids" from the government.