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Sandip Somany, president, PHD Chamber, along with senior industry representatives briefed the revenue secretary on the its recommendations.
The chamber suggested a number of issues for streamlining the direct and indirect tax laws. Somany said the government should consider reintroducing investment allowance to spur investments in industrial development.
It further suggested scaling down the corporate tax rate to 25 per cent in phases over a period of two years; reduction in the rate of Minimum Alternate Tax to 10 per cent, enhancement in the depreciation rate for plant and machinery to 20 per cent and removal of surcharge and education cess.
The chamber called for enhancement of various threshold limits operating under the Income Tax Act, “as the limits existing under the Act have become redundant in the context of rising inflation”. The chamber stated the expenses incurred by the corporate world towards corporate social responsibility should be treated as tax deductible expenditure. Moreover, any such expenditure towards the thrust areas defined by the government should be provided a weighted deduction of 150 per cent.
Vocational training should be treated as a part of education sector, stated the delegation. It was further felt that a suitable clarification may be inserted under Section 35AD of the Act to clarify that the enhanced deduction under the section shall be available to all assessees operating a cold chain facility whether such facility is utilised for captive consumption or not. Somany highlighted that the government must consider raising the limits in the context of inflation over the years.
On the Indirect Tax front, the Chamber maintained that there should be no tinkering with the Central Excise, Customs Duty and Service Tax Rates. The Chamber called for immediate introduction of Goods & Service Tax to give boost to the GDP of the country. A number of other issues were taken up in the meeting. The Chamber suggested amendment in Section 4 of the Central Excise Act; removal of provisions relating to repetitive service tax and excise audit; streamlining the provisions regarding the stay validity; simplification of procedures for claiming refund of SAD.
The Chamber also presented a number of suggestions for reducing litigations in the Indirect taxes. The Chamber felt that the rate of interest for delayed payment of tax / refund should be linked with the RBI Repo & Reverse Repo Rates. It was further suggested that similar provisions that exist under Income tax and VAT Laws should be provided for the small service provider (having turnover upto Rs. 1 crores) to pay tax at a concessional rate of 2%. It was further suggested that the list of services under reverse charge mechanism may be restricted and partial reverse charge provision may be rolled back. The Chamber further suggested that the due date for payment of Central Excise Duty & Service Tax may be extended to the 15th of each month or quarter as the case may be. A number of other suggestions with regard to Streamlining the Service Tax Registration Procedure and Cenvat Credit Rules were also made.
