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FICCI wants Govt to spur domestic investment

Fiinews by Fiinews
May 26, 2019
in Company, Industry Sectors, Investment
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Chamber calls for 25% corporate tax

 

FICCI

The Federation of Indian Chambers of Commerce and Industry’s (FICCI) key recommendation calls for the Government to spur domestic investment and consider cutting corporate tax to 25% in order to retain India’s competitiveness globally.

The chamber has suggested a simpler Alternate Minimum Tax in its pre-budget recommendations to the Finance Ministry.

A FICCI delegation led by its pas president Rajan Bharti Mittal, Past President, met Dr. Ajay Bhushan Pandey, Finance Ministry Secretary (Revenue) in the pre-budget discussion held in New Delhi on 24 May 2019.

The delegation stressed that with phasing out of exemptions and deductions available under the Income Tax Act, 1961, and to avoid complexities arising under Ind-AS, there is a need to review the concept of Minimum Alternate Tax (MAT).

A recommendation has been made to abolish MAT and extend a simpler Alternate Minimum Tax as is currently applicable to non-corporates to corporates, but at a reduced rate of 10% considering the reduction in corporate tax rate to 25% in line with global trend.

The need to restore weighted deduction under section 35(2AB) of the Act for expenditure incurred on scientific research being critical for Indian businesses was clearly stressed upon.

Recommendations for amendments required in the Act to facilitate smooth re-organisation across the economy were also made.

Some of the recommendations made in this regard are as below:

Allow successors in case of amalgamation, demerger or any other form of reorganization to be eligible to claim benefit of MAT Credit;

Section 72A of the Act should be amended to allow benefit of carry forward of losses, pursuant to amalgamation, to all companies irrespective of their line of business especially services business;

Suitable provisions be introduced in the Act to allow tax neutral merger of two LLPs;

Amend definition of demerger under the Act to be in alignment with Ind AS;
Provide clarification under section 55(2)(ac) of the Act to allow grandfathering benefit in case of shares received under tax neutral transfer in lieu of shares held as on 31 Jan 2018.

On the indirect tax side, some of the key recommendations are:

Currently, Merchandise Export from India Scheme (MEIS) and Service Export from India Scheme (SEIS) scrips cannot be utilized for payment of IGST & GST compensation cess on imports. The non-availability of utilizing the scrips towards the payment of IGST, has led to financial burden on the importers. It was recommended that the Foreign Trade Policy 2015-20 and Customs Law needs to be amended for allowing the utilization of MEIS & SEIS scrips towards the payment of GST on imports.

The existing Authority of Advance Rulings constituted under Section 245-O of the Act is common for both Customs and Income Tax applications and as result the average time period for obtaining advance ruling is 6 to 12 months. As a trade facilitation measure, a separate ‘Customs Authority of Advance Rulings’ needs to be constituted and made operational without any further delay;

Section 28(7A) of the Customs Act, 1962 as inserted by Finance Act, 2018 empowers the proper officer to issue a supplementary notice which would be deemed as the show cause notice (SCN) issued under the main provisions of Section 28 of the Customs Act. However, neither the meaning of supplementary notice has been defined under the Customs Act nor the circumstances and manner under which supplementary notice may be issued is prescribed. There is a possibility of ambiguities arising around the scope of supplementary notice. Recommendation was made that the “supplementary notice” should be defined in the Customs Act, 1962 and the circumstances and manner in which it may be issued may be prescribed expeditiously to prevent misuse of the provision by the authorities on ground;

A point was made that tariff duty rate changes are undertaken by the Government with strategic view of the future, resulting in avoidable disputes for the past period where customs department and the trade has been following a particular practice. To protect possibility of disputes for the past period, any upward revision of duty rates should be accompanied with protection for reopening of assessment practice of the past period;

During the Pre-GST regime, the custom benefits allowed exemption on goods imported for mega power project from Basic Custom Duty, Additional Duty (CVD) and Additional Duty (SAD). However, due to introduction of the GST Regime, exemption stand curtailed under GST Law. Post GST Implementation, only Basic Custom Duty is notified to be exempted resulting in increase in cost of developing the mega power projects in India. Recommendation was made to grant exemption from IGST payment on all the goods imported for mega power projects. Fiinews.cm

Tags: Federation of Indian Chambers of Commerce and IndustryMinistry of Finance
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