The Union Finance Minister, Shri P. Chidambaram met representatives of industry, industry associations and chambers of commerce as part of his pre-budget consultations with various interest groups and experts. The Finance Minister opened the discussion by requesting the participants to give their views on specific actionable points- tax and non-tax - to impart a new impetus to growth and investment by removing the existing obstacles.
Some of the important suggestions made by the participants during the meeting are as follows:
General:
- Provide incentives for Research and Development (R&D) activities for all sectors;
- Set up a Skill Development Bank and facilitate intermediation of knowledge;
- Encourage investment in the infrastructure sector by providing/enhancing tax exemptions for such investment;
- Move towards an effective GST rate of 15 per cent in the next few years;
- Promote India as a Corporate Headquarter by giving tax incentives;
- Give infrastructure status to gas pipelines and associated storage facilities and mega steel projects;
- Give exemptions for investment in agriculture related sectors like cold-chains etc;
- Increase depreciation rate to 25 per cent per year for tax purposes;
- Remove Fringe Benefit Tax (FBT) on expenditure incurred on sales promotion;
- Remove anomalies in the Cutsoms and Excise duty structures;
- Provide incentives for Indian companies to become global.
Industry Specific:
Small Scale Enterprises(SSI):
- Increase limit for excise exemption to Rs.3 crore and rationalize excise duty rates to provide a phasing in of the increase in the rates;
- Remove anomalies in the excise duty structure;
- Remove FBT on small and medium enterprises;
- Ease depreciation norms;
- Increase tax audit exemption limit;
Drugs and Pharmaceuticals:
- Enhance abatement norms from the existing level to 45 per cent of MRP;
- Remove withholding taxes on R&D and include expenses on clinical trials in R&D;
- Include overseas expenditure on R&D for exemption purposes;
- Set up training institutes for biotechnology.
Textile:
- Extend the Textile Upgradation Fund (TUF) by another five years ;
- Provide capital subsidy for processing hubs;
- Provide support system for relocation of old existing units.
Telecommunications:
- Decrease the total tax burden on this sector by rationalizing multiple duties and charges;
- Do away with the requirement of financial and performance guarantees;
- Simplify and rationalize customs duty on software for telecom industry;
Information Technology:
- Facilitate setting up of seed funds/angel funds to address lack of innovation;
- Provide incentives for setting up rural electronic infrastructure facilities;
- Remove complications in IT related tax structure and bring down litigations.
Tourism:
- Provide “infrastructure” status to tourism industry;
- Earmark funds collected for maintenance of heritage structures;
- Increase budgetary allocation for promotion of India as a tourist destination.
Source: PIB