HUDCO and HUDCO's Borrowers make extensive use of subsidies and have access to direct and other forms of low-cost credit to promote housing and several other activities for the economically weaker and low income groups of households. This study examines the implications of withdrawal or reduction in subsidies. Special circuits and directed credit and suggests options as to what might be done to equip HUDCO and HUDCO's borrowers to deal with this challenge. The package of recommendations relates to resource mobilization strategy (e.g. making larger use of lines of credit mechanism, credit-related bonds. and securitization of mortgages), restructuring of the lending profile and commitment of the entire institutional framework to programmes for the poor rather than the commitment of only HUDCO, and deregulation of HUDCO.

The major finding of this study, on the basis of a sample survey, was that the withdrawal exemptions have not led to a closure of small scale units in any significant manner. The changes in the provision relating to the use of brand names of others has affected some of the small scale units, as they have not been able to find a market for their unbranded goods. The study recommends the enhancement of the overall limits of exemption in the existing scheme as well as restoration of the exemption withdrawal in the 1994-95 budgets. The study does not favor the reintroduction of notional credit and it recommends a compound levy where a fixed amount is to be paid for units whose production is below Rs.75 lakh.

This report recommends the use of presumption as one way by which to increase the universe of taxpayers, and thus achieve sustainable fiscal correction in India. Presumption may be theoretically second-best to the ideal direct tax, based on self-declared income actuals with personalized deductions. But this ideal is not possible to achieve or even approach in developing countries like India, where a large volume of business is transacted in cash, and is not routed through the banking system. Faced with a consequent insufficiency of information records of the kind required for verification of self-declaration, enforcement of compliance becomes next to impossible especially in certain sectors and occupations. It is here that the need arises for base-broadening supplements to conventional direct taxation. The report examines the reasons for the failure of presumptive experiments in India, and points out that the Rs 1400 alternative flat levy is not in fact an example of a presumptive levy since absolutely no presumption of any kind is involved. The report also recommends the use of asset­ based presumption for the corporate sector, as a way by which to combat the phenomenon of zero-tax companies.

This study using data relating to 1989-90, develops a methodology for estimating effective rates of commodity taxes with only partial credit for taxes paid on inputs. Effective tax rates have been estimated for all major commodity taxes in India, namely, customs duties, Union excise duties and sales tax. These effective tax rates have been used for computing incidence of these taxes on consumers in rural as well as urban areas.

The report examines the system of motor vehicle taxation in Delhi with the objective of analyzing the aspects of economic efficiency, equity, administrative feasibility and inter-state comparability of introducing passenger and goods tax in Delhi. The study also examines the issue of the levy of such a tax on vehicles registered outside the State, by using Delhi roads, and makes an estimate of additional revenue generation from the tax at suggested rates. It also reviews the issue of road congestion and vehicular pollution in this context. The study concludes on the basis of the theoretical principle of user charges, likely incidence pattern and a comparison of taxes on motor vehicles in Delhi and four northern States of Uttar Pradesh, Punjab, Haryana and Rajasthan as well as in the other metropolitan cities of Bombay, Madras and Calcutta that there is scope for such a tax in Delhi, although for administrative reasons it may be best to levy it as a fixed amount per annum in the form of an additional motor vehicle tax.