Simplification of Tax structure
Central Sales Tax – Measures to completely abolish the CST should be looked at in the upcoming Budget, and the current rate of 2 per cent should be done away with. The rate was brought down to 2 per cent from 4 per cent earlier, and it has remained constant ever since.
Service Tax – Currently, the service tax rate in the country is 12.36%, which consists of 2% education cess and 1% higher education cess (12% + 0.24% + 0.12%). The Center should look at simplifying the rate, let’s say, by keeping it at 12% or 13% or any other approximate number, which could be inclusive of all the additional taxes.
A single registration for payment of VAT and other taxes, if implemented, would put an end to the process of multiple clearances, filling endless forms, etc, enabling businesses to operate with ease. All tax collection could be done online and/or at central locations with an aim of zero paper work.
Talking about the much awaited Goods & Services Tax (GST) which is underway, a clear road map for its implementation would help people look beyond the noise of confusion and uncertainty. A ‘One India’ Approach is the way forward.
Ensuring ease of doing business – Starting a business in India is not too complex; one simply needs to open up a bank account and start the company at the click of a button. Scaling up, however, gets tougher as one gets juggled in the multiple processes, registrations and formalities of the system.
The most difficult part of this is that these registrations are obtained from different departments of the State or Central government, and not one single owner. The SMEs demand minimal regulation, compliance and removal of paperwork hurdles, which could make the process of doing business, less intricate.
Greater allocation to Power –The power companies are often running out of fuel because the South Asian nation restricts natural gas prices. Shortage of coal is a major problems hurting India’s power generation. Inadequate domestic production and infrastructure bottlenecks continue to act as constraints for ensuring adequate supplies to power plants
Thus, the entire ecosystem of the power sector – from generation to distribution – needs attention.
Technology Upgradation –A greater access to modern technology and availability of funds to upgrade technology is the need of the hour.
Targeted investments in technology and innovation would spur the growth of the small and medium enterprises and also lead to job creation.
The Government should provide resources to enable access to ‘easy to use’ technology, and also roll out considerable initiatives to promote technology/ online education by organizing seminars, conferences, workshops, etc at an extensive pace.
Setting up of a ‘Technology Fund’, providing fund support for technology upgradation, at this stage would be a welcome initiative.
By Dinesh Agarwal, Founder & CEO, IndiaMART