Remove tax anomalies: ASSOCHAM to govt
The Associated Chambers of Commerce and Industry of India (ASSOCHAM), one of the apex trade associations of India, has sought removal anomalies as regards taxes on several sectors including the synthetic fiber, construction industry and benefits for the maintenance and the troubled civil aviation sector at the pre-budget meeting with the Revenue Secretary. The ASSOCHAM delegation led by Ved Jain, chairman of ASSOCHAM National Council on Direct Taxes said that the service tax rate and excise duty rate should be brought down to 8pc from existing rate of 12pc , as prevailing two year back, to accelerate the industrial growth.
It said tax base for goods and services has already expanded last year to generate higher revenue. The government can selectively increase customs duty rates to neutralize the effect of lower tax rate of excise duty and service tax.
They said the Goods and Service Tax should be introduced and ASSOCHAM should be involved in its implementation.
Besides, excise Duty on Synthetic Fibers which was increased from 4pc in 2008 to 12pc in the successive Budgets should be brought back to the original level because the competing fiber Cotton has effectively no Excise Duty, they said.
Polyester Industry is competing with Cotton yarn that attracts zero duty. This is required in line with the national fiber policy and to increase demand, capacity utilization and employment in the synthetic fiber industry, the chamber said.
"Service Tax levied on construction services until year 01.04.2011 was allowed as credit, but now credit is not allowed, which is retrograde steps and without any rational credit when credit was specifically allowed from 2004 to March 2011," said the ASSOCHAM pre-Budget memorandum for 2013-14.
"Therefore, now, when credit of service paid on such construction services are not allowed as credit, it should attract concessional rate of service tax at the rate of 2pc , as entire service tax is cost to Industry" it said.
The chamber said in view of the significant fall in the value of rupee in the last two years, the duty free allowance of travelling passengers should be revised. The allowance be raised from the current level of Rs 35,000 to Rs 50,000 for the incoming international passengers. Additionally, it should be raised for children to Rs 20,000 from Rs 15,000.
The MRO business in the civil aviation sector has huge potential to attract foreign investment. It is desirable to exempt the MRO services from imposition of service tax. These services need to be inclued in the negative list.
ASSOCHAM members said the base exemption limit of resident individual below the age of 60 years should be increased to Rs 3 lakh, to incentivize people to come into the tax net, ensure higher collection from greater compliance and encourage consumption and savings.
"In recent times, tax reopening notices under Sections 147/148 have become a very common occurrence and such notices are being served in thousands across the country. Simple audit observations, even on points of law are frequently being used as grounds for re-opening leading to extreme harassment of all assesses.
"The position has become so bad that even for legislations which have become obsolete, like Inter Tax Act, reopening are being done for very old years since the relevant law permitted reopening without any time limit," said senior members of ASSOCHAM.
The chamber said the reopening provisions are being misused in various locations, especially for salaried assesses, where scrutiny assessment is not possible as per the CBDT guidelines. "
This has become a breeding ground for corruption and harassment," the document said.
The member of delegation discussed issues relating to NBFCs, LLPs, Airport services and MRO, Minimum Alternate Tax and deletion of section 271AA.
Jain further mentioned that payment of interest to NBFCs should be exempted from TDS u/s 194A. Also, the section 43D should be extended to include in its scope NBFCs registered with RBI.
Provision for Non-performing Assets (NPAs) made by NBFCs registered with RBI should be allowed as a deduction u/s 36(1)(viia) of the Act, he said.