Reeling under the impact of global slowdown and a high interest rate regime, India Inc on Monday demanded that tax rates be retained at existing levels even as finance minister Pranab Mukherjee expressed concerns about challenges facing the economy.In their customary pre-Budget meeting with Mukherjee, industry leaders also demanded that healthcare services be kept outside service tax ambit, and privatise coal mines. “There are various challenges before us, including keeping inflation and fiscal and revenue deficit to manageable levels… which we all have to address collectively,” Mukherjee said in his address to the industry leaders.
At the meeting, business leaders suggested that service tax base may be widened with a negative list, besides exempting infrastructure companies and SEZ units from MAT.
“We have made a case for retaining tax rates at the present level. There should be no increase in corporate tax, service tax and excise,” Ficci president R V Kanoria said in the Budget expectation.
Mukherjee is likely to unveil the Budget proposals for 2012-13 mid-March in Lok Sabha.
He also made a case for privatisation of coal mines, stimulating demand through fiscal measures and revisiting the concept of dividend distribution tax (DDT).
CII National Committee on Healthcare chairman Naresh Trehan sought infrastructure status for the healthcare sector as that would encourage companies in setting up hospitals in smallers cities and towns.
Besides finance and commerce ministry officials, the meeting was attended by ITC Ltd chairman Y C Deveshwar, HUL MD and CEO Nitin Paranjpe, Suzlon Energy founder Tulsi Tanti and representatives of industry chambers.
The industry leaders also sought infrastructure status for aviation, telecom and education sectors, and continuation of interest rate subvention scheme for exporters till 31 March, 2013.
In order to improve healthcare, the industry suggested that a benefit of tax deduction of Rs. 10,000 be given to citizens for preventive health check-up.
Industry representatives were in favour of a reduction in interest rates by 50 basis points to stimulate investment sentiment and stimulate demand.
They also demanded that exports be included in priority sector lending by banks and duty on readymade garments be either reduced or withdrawn.
Company bosses also sought clarity on the timeline for introduction of Goods and Services Tax (GST), besides rationalisation of MAT — a levy that was introduced to bring zero-tax paying companies into the net. At present, companies pay MAT at 18.5%.
They also suggested implementation of the Direct Taxes Code (DTC) in its entirety to help arrest cases of tax evasion.
FIEO president M Rafeeq Ahmed said, “Interest rate for the MSME sector should be capped at seven per cent and others at nine per cent and subvention should be provided to all sectors of exports at least till March 2013.”
FIEO also sought complete exemption of excise duty on handmade carpets, reduction of excise duty on man-made fibres to four per cent (from current 10 per cent), and exemption of service tax on currency conversion for exports.