Assocham’s Pre-Budget Memorandum Seeks to Spur Economic Growth
Dec. 6 – The Associated Chamber of Commerce and Industry of India (Assocham) released its Pre-Budget Memorandum for 2013-2014 on December 3, 2012 with the chamber pointing out that the country is facing competitive disadvantages brought on by complex multi-layered indirect tax structures. Assocham also suggested measures to be taken in order to revive consumer demand and perk up investments.
The country’s economy registered a mere 5.3 percent growth rate from July to September this year, which was mainly due to the weak performances in the manufacturing and agriculture sectors. According to President of Assocham RN Dhoot, it is essential that the upcoming budget memorandum addresses indirect tax issues facing the industry and services sectors given the current economic environment of falling GDP growth and recession in many parts of the global market.
The Pre-Budget memorandum presses for corporate tax, service tax and excise duty cuts along with an increase in the income tax exemption limit. Further proposals are as follows:
- Reducing excise duty and service tax rates from 12 percent to 8 percent
- Cutting the effective rate of corporate tax from the current 32.45 percent to 25 percent
- Raising the personal income tax exemption limit to INR3 lakh
- Raising the deduction of interest on housing loan from INR1.5 lakh per year to INR5 lakh per year
- Raising the base exemption limit of resident individuals under the age of 60 to INR3 lakh
- Raising customs duties on finished goods to protect the domestic industry from unfair competition from foreign countries
- Removing the additional tax collection through way of surcharges and education cesses on corporate assesses and similarly, an education cess on non-corporate assesses
Dhoot also called for an increase in the depreciation rate on plants and machinery, from the existing level of 15 percent up to 25 percent, to help revive the sagging economy.
Another significant recommendation in the memorandum concerns the tax reassessment under Section 147/148 of the Income Tax Act on matters already examined. The memorandum noted that the tax reopening notice initiated under Section 147/148 of the Income Tax Act has become a very common occurrence and the reopening provisions thereof have been misused in many occasions, leading to corruption and harassment.
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