The Confederation of Indian Industry (CII) has told Revenue Secretary Shaktikanta Das and his team of senior officers from the Ministry of Finance that only implementation of steps announced by the government can create an enabling and investor-friendly environment for doing business.
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This was conveyed during pre-budget consultations held here this week.
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The CII team was led by Dr. Arun Bharat Ram, past president, who urged the finance ministry to continue bring in simplicity, clarity and stability in the tax policy regime, putting in place technology based e-governance initiatives on procedural simplification, to help boost investor sentiment, take the 'Make in India' initiative to a new level and galvanize the economy to a higher and inclusive growth path.
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While lauding the initiatives of the government to introduce the Constitutional Amendment Bill on GST in the ongoing winter session of Parliament, Bharat Ram stated, "It may be appreciated that CII is deliberating in a constructive manner on the possible solutions for fundamental design issues on GST. This will require further dialogue with the Government officials to be able to arrive at mutually satisfactory outcomes. The industry needs the opportunity for regular interaction with the officials dealing with these aspects."
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Elaborating further on the subject, CII suggested the removal of anomalies in customs duty and reducing the CST rate from two to one percent due to the delay in implementation of GST.
The short-term stimulus package involving reduction of excise duty on certain goods to continue up to March 15, 2015 was strongly emphasized by CII.
In the Union budget 2014-15, this reduction in the range of two to six per cent was provided up to 31st December 2014. CII further suggested for rationalization of CENVAT credit scheme by doing away with the negative list.
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During discussions CII advocated that investment allowance should be extended to the infrastructure sector in order to further spur investment activity in the economy. Further infrastructure companies should be exempted from paying MAT.
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"The MAT on SEZs should be abolished. Similarly, the government should do away with dividend distribution tax at SPV level to make REITs attractive", said one of the members in the CII delegation.
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CII further advocated the promotion of manufacturing activity as one of the priorities to augment growth. During the meeting, CII stressed on the need for incentivizing research and development to give a thrust to the Make in India Initiative.
The benefit of weighted deduction on research and development should be extended to expenditure on building exclusively for RandD. Moreover, the negative list as given in the Eleventh Schedule be removed in the context of section 35(2AB).
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CII also sought the revamping of dispute resolution by strengthening the authority on advance ruling (AAR) and Advance Pricing Authority (APA). The provisions of advance ruling should include private companies. The branches of AAR and APA should be strengthened. Similarly, the benches of CESTAT should be increased to resolve indirect tax litigation where there is a huge pendency on excise and service tax cases. This would unlock funds stuck in tax disputes, according to CII.
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In concluding, Bharat Ram suggested to "Strengthen Dispute Resolution Panel (DRP) with full time and independent members, and empower DRPs to enter into negotiated settlement with tax payers on the basis of 'no further appeals to high court'."
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According to CII, the economy is turning the corner and green shoots of recovery are gradually becoming visible. Hence, this is an opportune time to take the reform agenda forward which would transform the economy and take the country back to higher orbit of growth path.
