PHD Chamber seeks rationalization and simplification of our Present Tax System.

PHD Chamber has asked for reintroducing investment allowance, abolishing Dividend Distribution Tax, doing away with MAT, lowering Corporate Tax, across the board reduction in VAT  and designing special package for sectors such as exports and real estate, SMEs among others as a confidence building measure for industry.

In their interaction with the revenue Secretary, Mr. P V Bhide and other senior officials of the Finance Ministry here today, a high powered PHD Chamber team lead by Mr. Ashok Kajaria, Sr V P , PHD Chamber, and Chairman and MD Kajaria Ceramics Ltd, Mr. R V Kanoria, Chairman and MD Kanoria Chemicals and Industries Ltd, Mr. Sanjay Bhatia, Ex President PHD Chamber and Managing Director, Hindustan Tin Works Ltd , , Mr V.S. Wahi. Mr. Murlidharan, Mr. J.K.Mittal, Mr. S. Kapur, DSG, PHD Chamber and Ms Shalini Mathur, Secretary, Indirect Taxes Committee also called for abolishing FBT and introducing voluntary disclosure of income scheme(VDIS) .

PHD Chamber in its pre-budget submission with the Finance Ministry suggested that the   government should stick to its target of abolishing the central sales tax by 2010 and introducing a uniform GST that would subsume service tax and excise with a plethora of state taxes. Besides, VAT should be converted into a genuine destination based tax that tracks inter-state sales and provides refunds. This would help promote domestic manufacturing and industry and help them compete with other countries in the international market.

Industry contends that our present tax rates too high as compared to international standards, which raises the cost of production in industry. According to a study  the prices of manufacturing goods in India is, on an average  28-33 per cent higher in India as compared to China, half of which could be attributed to the difference in indirect tax levels.

Such a finding is also corroborated by PHD Chamber members who find that for items such as consumer electronics and durables, the overall incidence of indirect taxes is close to 30 per cent which is much higher than Thailand where VAT is only 7 per cent and China where VAT is 17 per cent. The cascading domestic taxes as also the tax barriers created through central sales tax are making indigenous goods non-competitive even for products where we enjoy a competitive advantage. Besides, there is need to stimulate demand in the economy by undertaking industry friendly fiscal measures such as Introducing investment allowance, abolishing dividend distribution tax, doing away with MAT ,lowering corporate tax to 20% , abolishing FBT, introducing voluntary disclosure of income scheme(VDIS) , effecting across the board reduction in VAT by 2% and designing special package for sectors such as exports and real estate, SMEs among others as a confidence building measure for industry. Such measures would help stimulate growth which, in turn, would generate revenue for the government.

There is also a need to abolish the inverted duty structure, wherein inputs attract a higher duty than finished goods and rationalize the customs duty in order to promote domestic value addition. The priority in the Budget should be to address and remove this anomaly and ensure that customs duties on inputs are not higher than that on finished products.   This would provide larger benefits of FTA to domestic industry

 

Anjula Singh Solanky
Dy. Secretary-Media Relations
PHD Chamber of Commerce and Industry