Pradeep Jain - Chartered Accountant

Budget Comments 2014

Rajasthan Chamber of Commerce and Industry - on 09 Feb, 2016 wrote:

Suggestions for Union Budget 2016-17 In the present situation of extreme turmoil and weakness in the international economic system, India appears to be a bright spot to continue to achieve strong growth in the coming years in view of its less dependence on exports, low exposure to real estate and huge domestic consumption demand, besides better management by RBI. As is rightly being explored by Hon’ble Prime Minister in various countries he has visited, the next Budget should encourage investment flow in the country from wherever possible. Simultaneously, conditions within the country need to be improved on the ground level for supporting such investment flow, with reasonable reward for the investment. Expectations from the budget therefore run high. Reforms and support are anticipated for giving a fillip to the manufacturing sector. Units in the Industrial Manufacturing Sector are looking at government policies and actions to revive the manufacturing sector which has been reeling under pressure for quite some time. To bring them out of this slump, they not only need a big bang reform announcement, but also its swift implementation in full measure. It is rather unfortunate that a big bang reform in indirect taxes, i.e., Goods & Services Tax (GST), has not yet been passed in the Parliament, due to which its implementation is likely to be delayed. However, pending that, the following sectors need to be considered for realising the potential of the country : • Infrastructure: To support the ‘Make in India’ campaign, what India needs is effective and efficient connectivity between ports, as well as better road and rail connectivity between ports and plants. This is more important for land-locked State like Rajasthan. The sector therefore would expect a major announcement to create more facilities to enable movement of raw material and inputs within the country and transporting the finished products out of the country. • Attracting investment in high technology, defense and aerospace: Indian organizations have already proved their manufacturing capabilities in the auto and engineering sector, paving the way for major investment in high technology, defence and aerospace sectors. Attracting investments in these sectors and making it easier for global companies to set shop in India, is very critical to make the country a true manufacturing hub. • Boosting the MSME segment: To truly create a backbone of manufacturing in India and creation of huge job opportunities, it is important that effective incentives and support to the Micro, Small and Medium Enterprises are given as these are the enterprises that will create multiplier effect for job creation and development of entrepreneurship. • Labour reforms: It is one of the most critical factors which will enable local as well as multinational companies to set up manufacturing activities in India on a large scale. In fact, the existing labour laws have only protected organized labour without helping in the manufacturing units to grow and create more jobs. Though a lot has been said about labour reforms, a clear, practical and truly win-win reform has not been taken up. Rajasthan has taken lead in this behalf by amending the Labour Laws, Factories Act, Apprenticeship Act etc. and the same need to be taken up at the Central level. • Making energy available: Dropping crude oil prices have actually reduced energy cost for manufacturing industries. However, we are still far from providing the necessary power to the manufacturing industries to continuously run their operations and the electric power cost continues to go up at periodical intervals. Renewable energy costs, particularly solar energy, are coming down and it is quite appropriate that at the COP21, the Government has set a very stiff target for these sources of energy. Rajasthan Government has laid out a ambitious plan for harnessing solar power. • Making GST a reality: All out efforts need to be made to bring GST to reality and roll that out as early as possible. The preparatory work must continue at war footing. Apart from policy decisions and investment outlay in the budget, critical expectations will always be on Direct & Indirect Tax proposals. The Government has already announced a road map for doing away with the corporate tax concessions and reducing the corporation income tax from the next year onwards. It would be desirable to have very simplified rules and provisions so as to have clarity and reducing the disputes and litigations. Apart from these, we also feel that more money should be made available in the hands of the individuals, who would utilize it either for purchases (which would create consumption demand and lead to capacity creation and growth) or savings (which would be directly employed for growth of the economy). For this, we suggest the following :- DIRECT TAX PROPOSALS Income Tax Slabs :- The income tax slabs and rates may be rationalized as under :- Upto Rs. 5.00 lakhs Nil Over Rs. 5.00 lakhs and upto Rs. 20 lakhs 5% Over Rs. 20 lakhs and upto Rs. 50 lakhs 15% Over Rs. 50 lakhs 20% We believe that this would lead to a big surge in the consumption demand and also increased savings. With inflation in check, even lower interest rates on savings instruments would retain their attractiveness for savers. Tax on Agricultural Income :- The Government should consider imposing income tax on agricultural income from farms above a certain specified limit (say 50 acre). This would not only increase the tax base but also be a good source of revenue. Most of such large land holdings are in the hands of rich farmers and other resourceful entities like cine actors, players and other such classes of persons etc. and it should not be difficult to identify such large land holders and make them contribute in nation building through tax on their farm income. A reasonable threshold land holding for not levying income tax would insulate small and marginal farmers. More incentives for R&D :- For realizing the Prime Minister’s thrust to ‘Make in India’ effort, it is essential that indigenous Research & Development becomes effective. At present, the expenditure on R&D in the country is very low and on such low level of expenditure, it is not really practicable to expect it to create new products, new applications, new designs and alternative raw materials etc. for value addition or cost reduction. It is therefore imperative for the Government to grant tax incentives to encourage indigenous R&D and a suitable mechanism needs to be evolved so as to ensure that the provision is not misutilised. Higher interest benefit on housing loans :- For giving a boost to the realty sector (which gives huge employment and also to meet the stated objective of housing for all by 2022), we suggest that the benefit of exclusion of interest on housing loans may be revised upwards from the present Rs. 1.50 lakhs to at least Rs. 3.00 lakhs per annum. Minimum Alternate Tax (MAT) :- Since the various exemptions are to be done away with gradually, a time has come to consider the desirability of ‘Minimum Alternate Tax’. Restricting the MAT levy from 18.5 per cent to 10 per cent would be a welcome initiative, if complete removal of MAT is not considered feasible at this stage. Tax on Royalty/Fees for Technical Services :- There is a need for rationalization of law with respect to taxation of royalty (copyright v/s copyrighted article). Tax on Royalty/Fees for Technical Services should be reduced from the current 25 per cent to 10 per cent. Deduction of expenditure for skill development :- There is a weighted deduction for expenditure incurred on skill development to boost skilled manpower availability. This benefit is not extended to the skill development of existing employees. Technical Development is a continuous process and accordingly, this benefit should be extended to expenditure incurred by companies for their existing employees as well. INDIRECT TAX PROPOSALS There is huge stress on businesses for compliance with multiple state tax legislations and as stated above, an early roll-out of ‘Goods and Service Tax’ would be very effective in eliminating this problem. As such, we are not making any suggestions for indirect taxes. Till such time that GST comes into practice, the following indicative transition steps, would help build and reinforce positive sentiments for the reform :- • Central sales tax rate could be reduced to 1 per cent. • The possibility of increase in number of items in service tax be explored. GENERAL OBSERVATIONS More administrative reforms in the direct and indirect tax administrations are needed for encouraging voluntary tax compliance and checking harassment of genuine tax payers. Marketing Hubs need to be created for providing marketing support to SMEs. Also, Purchase Preference in Central as well as State Government purchases should be actually extended to products manufactured by SMEs to atleast 50% and Price Preference to atleast 10% be given. (Purchase preference may not only exist on paper but it should be ensured that these are put in practice too). Agriculture Infrastructure development is still not keeping pace with the requirement and needs to be energized. Particular attention may be given irrigation facilities throughout the country, if we have to attain high growth rate in the agricultural sector which is a sine qua non for overall high GDP growth. The definition of agriculture be revisited to include floriculture, horticulture, poultry, fisheries, sericulture, animal husbandry, bee keeping, etc. Joining of rivers may be taken up as a national programme on the lines of Highway Development programme. This would fulfill the twin objectives of making water available equitably throughout the country as well as avoiding the havoc caused by the annual floods in certain parts of the country such as Assam, Orissa, Bihar, Andhra Pradesh etc. It is also felt that declaration of water as a National Resource is of paramount importance so as to defuse State Ownership which has frequently led to civic disturbances in different parts of the country and threats of water stoppage by some States to other States. By declaring it as a national resource, comprehensive water development programmes could be formulated in the best interest of all the States. Scholarships : A large Fund should be established for providing Scholarships to all deserving and needy students. The scheme should also cover those NRIs who may be not be very well off, for pursuing higher studies for themselves or their children. In respect of various reliefs, concessions etc. announced by the Government, the procedure for availing of the same should be quite simple. Also, a Nodal Agency should be appointed in all States for extending all the benefits under a single window. While excellent schemes are formulated in the country, the intended beneficiaries do not get the benefits, either on account of slack implementation or due to leakages and corruption. Hence, a strong and effective Monitoring Mechanism needs to be put in place for periodic monitoring of progress under various programmes. -
Kandarp Dholakia on 24 Feb, 2015 wrote:

Suggestion :- 1. So far as exemption to the specified drugs and medicines are concerned, there should be blanket exemption. No condition should be attached to it. This will reduce the paper work, as no central excise officer verify whether the conditions are fulfilled or not. 2. The govt. Should come out the natur of transactions which are appearing in BAS for the eligibility of CENVAT Credit. There are lots of confusions. Similarly taxable services falling in other than 119 services, the govt. should allow the cenvat credit. 3. The M& TP Act and Rules should be in line with the Notifications and Rules which are applicable to CEA, 1944 and Ruels made thereunder. Presently, only section 4 and 4A are applicable. 4. The time limit for submission of proof of export under M& TP Act should be increased form one month to one year, as the exporters get the documents from customs only after a month. So its difficult for the assessee to comply with the provisions for rebate or under bond. Unnecessary due to delay on the past of customs officers, the exporter is unnecessarily penalized. 5. The earlier cenvat credit rules allow the cenvat credit on inpits, even if the final export products are exempted form duty.
Ram Sharma on 24 Feb, 2015 wrote:

Dear shri Praddep ji As per your below email, please note : Manufacturer or service provider is compliance with uncertain tax provisions particularly in the Excise, Service tax ,etc. 1- Reduction the tax cascading in the current indirect tax regime : April 2011 Cenvat credit provisions were amended and cenvat credit eligibility was restricted such as in case of motor vehicle related service namely rent-a-cab services, bus services issued by manufacturer for employees etc, catering services , construction & related services, insurance services, services used for export of goods to be included such as CHA service, THC service etc. this leads to unnecessary denial of cenvat credit on services which are essential for manufacturers and service providers. Thus , I request you to re- visit these cenvat credit provisions and make cenvat credit provisions seamless. This will provide a non- adversarial tax environment. 2- Simple rate of interest `12% to imposed on delay payment of duty & tax instead of period delay more than six months and up to one year 24% and more than one year 30% which unjustified for industry. 3- Reverse mechanism scheme and partial reverse mechanism scheme has to be removed to reduce exercise for manufacturers. Service tax to be paid by service provider not service receiver. You are requested to consider my above point for the budget 2015-16.
raguraam on 21 Feb, 2015 wrote:

all services can be bought under reverse charge mechansim , with exception to service provided by banks, insurance companies and psu
Nawal Agarwal on 20 Feb, 2015 wrote:

Ist year of registration under service tax exemption limit should be increased from Rs. 9 lakhs and taxable limit should be increased from Rs.10lakhs, to encourage the small service provider
V JAGADEESH on 20 Feb, 2015 wrote:

Can the FM give relief by taking 100% cenvat credit for capital goods on receipt of goods so that keeping track of availing balance 50% cenvat in the next financial year, be done away with.
V JAGADEESH on 20 Feb, 2015 wrote:

Service Tax to be made still simpler by abolition of Negative list and giving clear cut definition of taxable services. Also it should be allowed to pay service tax in cenvat credit for reverse charge mechanism instead of making payment in cash and then allowed to take the credit.
Rajesh M on 11 Feb, 2015 wrote:

Sir the following need to be considered 1) Exclusion for services rendered by employee to employer could be extended to services provided by employer to employee as well as it creates very much confusion regarding taxability of notice period amount and like. 2) Treatment of branch as a separate entity for purpose of definition of service whereas for the purpose of export of service it is not the same. Export benefits should be given for services provided by branch/head office to overseas head office/ branch. 3) Trading if goods should be excluded from the definition of service tax instead of entry in Negative List which leads to confusion/litigation. 4) Declared service of ‘agreeing to the obligation to refrain from an Act or tolerate an Act or a situation to do an Act’ is to be clarified as it looks vague and covers many transactions which are not the intention of law. 5) Small Service Provider exemption should be applicable for service recipients who are liable to pay service tax under reverse charge. 6) Clarity on provisions relating to Service tax audit needed. 7) Joint charge should be removed. 8) Reverse charge should be limited to unorganized sectors. 9) Deduction/ Adjustment should be given for service tax paid for the portion of Bad debts. 10) Interest rate for delay payment of tax should not be higher like 24% and 30% where interest on refund is 6%. 11) Few rules of Place of Provision Rules, 2012 which are in contravention with the charging section should be amended like where the service were provided outside India but becomes chargeable to service tax because of Rule – 8. 12) Rule -7 needs to be amended and service tax should be charged only for the portion of service performed in India. 13) Rule – 5 of Point of Taxation Rules should be suitably amended so that it should not charge service tax on services which are outside of charging section 14) It is suggested to merge service tax and education cesses as it is difficult for trade to maintain separate ledger accounts instead government can apportion a part of tax collection towards education.
MEHUL M ASHAR on 14 Jun, 2014 wrote:

Respected Sir, Govt.should follow the format of 1999 when the excise duty till 1 crore was 9.6% & after that it was 16% so there can be income for the govt. & govt. can keep watch on them as most of the tax theft is taken place in the ssi units taking the benefit of 1.5 crore exemption, due to this exemption ssi units take disadvantage of this scheme & the intention of govt.implementing this scheme doesn't reach to the govt.due to this the income of govt. reduces & whole burden comes on the common man. THANKING U
Chandani on 08 Jun, 2014 wrote:

Clarification is required for indirect taxes particularly service tax. As the name suggests indirect tax is reqd to be collected from end user but in many situations person is not able to collect service tax and has to pay as per inclusive method which affects its income. Hence rate of service tax should be reduced or some sought of set off in taxation should be allowed to such assessees. Moreover, Negative list of services should be abolished and detailed Clarification should be given for definition for service..
kannan on 05 Jun, 2014 wrote:

1) PAN details canbe reduced because some of the assessees changes their residences. as and when cannot rectify, sometimes most frequently. 2) service tax minimum canbe raised to 15,00,000 3) while collecting PAN data getting assesses thumb impression and eye ball may be scanned. because there cannot be more PAN to a person 4)income from house property, adhoc deduction of 30% can be revised,
O.V.Srinivasan on 03 Jun, 2014 wrote:

Sir, Suggestions Indirect Tax GST to be implemented so that other indirect taxes such as Excise, Service tax, Entry Tax, VAT, etc are abolished and double taxation and cascading effects are totally avoided. This would also lead to better tax compliance and also simplification and will drastically reduce tax litigation. Direct Taxes DTC to be introduced so that I.T. provisions are simplified so that foreign investors start investing in India which at present is at the bottom level due to complexity in the income tax provisions and also harassing foreign investors by briniging retrospective effect of tax provisions by the UPA govt. Regards O.V. Srinivasan
Mahendra Sharma on 02 Jun, 2014 wrote:

GST should be started if its good for all the sectors
K Srinivasan on 02 Jun, 2014 wrote:

Sir, Suggestions:- 1. Credit of 50% restricted for capital goods may be withdrawn and allow to avail 100% in the first year itself. 2. Excise returns and service tax returns may be clubbed and details of consolidation may be allowed on Monthly basis. 3. Rule to be modified to allow the LTU assessese to clear the finished goods to their other location without excise duty even for multiple movement 4. ER4,ER5,ER6 and ER7 to be merged and consolidated. 5. Cenvat credit and service tax credit to be allowed even for post manufacturing activities of export 6. Export warehouse should be allowed to avail service tax credit and cenvat credit. 7. Existing cumbersome rules to be modified to allow the assessee to have smooth operations and follow the excise and service tax rules. 8. Simplified rules stating allowable cenvat in RG23A and RG23C , service tax to avoid audit objections. Expectations: Income tax slab may be increased from 2 lacs to 5 lacs to give maximum benefit to salaried Regards K Srinivasan
visu iyer on 30 May, 2014 wrote:

Income Tax is paid on the income - okay On expenses also there is a tax - Service tax On savings viz. insurance and mutual fund also there is a service tax. Request Respected FM, to abolish income tax retaining service tax @ 5% for all services with no abatement and exemption

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