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Home Banking & Finance

Business community wants improved ease of doing business

Fiinews by Fiinews
December 9, 2017
in Banking & Finance, Budget, Economy, Exports
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FICCI recommends tax proposals

FICCI

The Indian business community has called for expeditious domestic tax reforms and measures for improving the ease of doing business scenario in the country and enhance competitiveness of Indian industry.

The call was made by a delegation from the Federation of Indian Chambers of Commerce and Industry (FICCI) to Finance Secretary Hasmukh Adhia on 7 Dec 2017.

The delegation, led by FICCI president Pankaj Patel, met the Finance Secretary as part of pre-Budget consultations. The delegation included past Presidents of FICCI Jyotsana Suri, Sidharth Birla, YK Modi, Harshpati Singhania, RV Kanoria and Secretary General Dr Sanjaya Baru.

The major issue discussed in the meeting was steps to deal with the US tax rate cut which is set to significantly impact Indian industry if corrective measures are not taken.

FICCI has recommended a similar approach, as in the US on reducing corporate tax rate besides other tax changes to ensure the competitiveness of Indian exports and industry.

The FICCI delegation recommended several tax proposals that will help in achieving a more business friendly tax ambience, such as review of provisions 56(2)(X) and 50CA of IT Act 1961 to exempt ordinary and legitimate commercial transactions, withdrawal of Income Computation and Disclosure Standards (ICDS), rationalisation of the formula prescribed under the law to compute notional disallowance under section 14A of the IT Act.

The delegation also sought grant of tax reliefs/concessions pursuant to proceedings under Insolvency and Bankruptcy Code (IBC), 2016.

It was suggested that while the enactment of ‘IBC’ Code, 2016, ushers in a paradigm shift in the manner in which insolvency proceedings are carried out in India, there was need to encourage applicants for submitting and implementing viable resolution plans for revival of stressed assets and ensure fulfilment of the objectives of IBC through certain modifications to the Income-tax law so that the implementation of resolution plans under the IBC does not lead to undue tax costs.

The FICCI delegation pointed out that the Goods and Services Tax (GST) law seeks to bring transactions between different registrations of the same legal entity or between premises of same legal entity located in different states within the ambit of GST.

This results in taxation of artificial transactions and not economic transactions since collective performance of services is also treated as taxable supplies between branches.

The delegation has urged that the supply of service within the same legal entity from one vertical or division or office to another for use/consumption in the same legal entity should not be made liable to GST.

Highlighting the specific goods, services and transactions in respect of which ITC is restricted under the GST laws, like food and beverages, outdoor catering, motor vehicles etc.

FICCI has recommended that suitable amendments in the GST law be made to allow ITC on all expenses incurred for business purpose and that there should be no restriction of ITC on goods distributed as free samples since sample distribution is necessary in the ordinary course of business.

The delegation flagged that intermediary services provided from India to parties outside India and earning convertible foreign exchange should be treated as export of services under the GST regime.

FICCI delegation also highlighted the impact of double taxation of the same transaction in case of in-bond sales basis the recent circular issued by the Government and requested for review and further clarification by the Government.

To reduce the compliance burden for the small taxpayers, FICCI suggested that exemption from registration be provided to supplier of goods making inter-state supplies of goods if his aggregate turnover is less than the prescribed threshold under the GST law i.e. Rs.20 lakhs or Rs.10 lakhs as the case may be. fii-news.com

Tags: Federation of Indian Chambers of Commerce and Industry (FICCI).Finance Ministry
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