With the proposed goods and services tax (GST) not too far away, much is expected from this Budget. The key would lie in how the red carpet is rolled out to GST by way of addressing the transition from the present indirect tax system to the proposed GST as a seamless affair.
In this context, here is a synopsis of the wish list of the industry and trade at large, from an indirect tax perspective. The term ‘input service’ (under Cenvat Credit Rules, 2004) has gone through its share of litigation and interpretations, with the trade knocking the doors of judiciary for much needed relief and justice. It is in the interest of the department and India Inc to bring in suitable amendments in the definition of input service, which could put an end to the litigation’s on this count.
It has been a well-settled principle to ensure no tax is exported from the country. However, ‘export of service’ continues to be a highly contentious issue, in spite of the best efforts of the Central Board of Excise & Customs to bring about enough clarity on the subject matter. One would expect this Budget to introduce a well-drafted and legally sound amendment or clarification to settle this issue once and for all, which would be beneficial for the service exporters at large, making them more competitive in the challenging global market.
Global warming is a major concern the world over and India should ensure that substantive impetus is provided to renewable energy projects such as solar energy to replace conventional energy projects. Specific impetus should be provided by way of customs duty exemption to imported goods/ equipments in relation to solar power projects in line with the benefits available to nuclear/ thermal power projects.
New units in the north-eastern region were enjoying benefits of refund of excise duty on finished goods paid in cash, which was subsequently curtailed by the ministry of finance, thereby limiting such benefits to specified value addition norms only. This has resulted to units opting for fixation of special rates, thereby leading to delay in refunds and increased paperwork. With GST on the anvil, it is suggested that the full refund of duty paid in cash, as provided earlier, is re-introduced to ensure a conducive investment scenario in such states.