Even as the Centre and states dilly-dally over the roll-out of the goods and services tax (GST), India Inc on Tuesday called for a timely roll-out of the proposed indirect tax. The date of implementation of GST, originally scheduled for April 1, is under cloud as states are yet to converge on its final model.
Industry lobby groups including CII, Ficci and Assocham demanded this at a pre-Budget meeting with finance minister Pranab Mukherjee on Tuesday. ?GST is the most important reform measure that is awaited. Now we do not have a single market. We want the GST to be introduced at the earliest,? CII president Venu Srinivasan said.
The introduction of GST by October 2010 as the 13th Finance Commission has suggested was acceptable to the industry, but an interminable delay was not. However, the chambers called for a flawless GST, instead of having a hasty roll-out. ?We have urged the government for early introduction of GST. But we would rather have a flawless GST than a hasty one,? said Assocham president Swati Piramal. Assocham believes that the implementation of GST would reduce cost of production of India Inc by 10-15% and add Rs 1,00,000 crore to the exchequer.
?The exclusion of real property, petroleum and alcohol from the GST is also a cause of concern to Ficci. The same would be contrary to the basic objectives of the GST. It would therefore be desirable to bring all these within the GST ambit. Natural gas, for which decision is yet to be taken, ought to be included and given declared goods status,? said Ficci president Harsh Pati Singhania.
Presenting their wishlist for Budget 2010-11, India Inc has pitched for the continuation of the stimulus measures and has also called for rationalisation of tax rates in order to sustain the economic recovery. Even as the government is planning a review of the stimulus measures so as to trim its fiscal deficit, industry chambers urged that fiscal consolidation should be taken up only after a full and sustainable recovery.
?We want the stimulus measures to continue for at least six more months. Withdrawing the stimulus should be gradual and in a calibrated manner to make sure that the growth is sustainable,? said Srinivasan.
M&M vice-chairman Anand Mahindra, is learnt to have told ministry officials that growth in auto sales in recent months is exaggerated due to the low base in the year before, while making a case for the continuation of the stimulus measures.
For further pre-Budget consultations, Mukherjee and top finance ministry officials are scheduled to meet agriculturists on Wednesday and bank chairmen the day after. Mukherjee will also be holding discussions with state finance ministers on January 13.
On the direct tax side, the chambers have proposed that the rate of the minimum alternative tax should be brought back to 10%, as the current rate of 15% is almost the same as that paid by a regular tax paying company. In addition, to attract more foreign investors in to the country, Assocham has called for reducing the corporate tax rate ?as its effective rate exceeds 35%?.
Further, in order to give purchasing power to consumers, Singhania called for a rejig of the income tax slabs by increasing the maximum bracket to Rs 7 lakh, which can be increased to Rs 10 lakh in the next two years.
Although things are looking up for the India Inc, but the economy is still fragile and is getting magnified because of the low base effect. The ray of hope has come mainly because of the government stimulus. For the growth to turn robust, it is absolutely essential to continue the stimulus package? said Piramal.
