Union budget 2014-15 manufacturing sector expectations
With 2014-15 Union Budget almost here, Indian manufacturing sector expects labour reforms where decision making is decentralised to bring it to the grass root level. Norms associated with sanctions too need to be simplified. Incentives for exporters could act as an impetus for overall Manufacturing industry and help replenish foreign exchange reserves.
Need for reforms in taxation and tax administration is immense. Under direct taxes, Export oriented unit (EOU) needs encoragment and support through income tax exemption. Income Tax Dept. needs to look into appeals before appellate authorities within 1 year of filing. Applications for refunds should also be passed within a year and government should take disciplinary action on errant officers. Assessing Officers need to be taken to task for disallowing rightful/ reasonable claims and making arbitrary/ ad hoc additions to income.
Fixed asset investments can be encouraged through increase in depreciation limits and investment allowance. MAT Withdrawal would be effective as it works as a disincentive for efficient units. Double taxation of income, once at Net profit level and then during distribution by way of dividend should be avoided. Rationalisation of TDS provisions are key. Assessees should not be penalised with credit of tax deducted at source for tax deductor’s mistakes when uploading TDS returns. Accelerated depreciation on investment in non renewable energy sources like windmills, solar plants, etc should be introduced.
In regards to indirect taxes, Service tax provisions related to Reverse charge mechanism should be done away with. Units should be allowed to export goods on payment of duty, and claim subsequent refund. SHIS licence entitlement scheme should be continued.
Power Sector Reforms should encourage a transparent policy frame work for power generation from renewable sources. Captive consumption of power in interstate facilities should be allowed, so a generator can use power generated in one state in his manufacturing plants located in other states. Cross subsidy reduction in power cost is proposed.
Provisions of the Companies Act, 2013 applicable to all private companies should be made applicable to private companies above a certain threshold. Cost Audit provisions should be made applicable businesses manufacturing essential commodities s excess profiteering can affect public at large. Others should be exempt from Cost Audit to safeguard secrecy of proprietary information relating to costs.
Income Tax slabs should be eased so honest tax payers are not punished. In any case, only 40,000 people in India have declared income of more than 1 crore, which is an erroneous and a misrepresentation.
Please Note: The above article is a compilation of pre-budget expectations for the manufacturing sector provided by Mr. Farokh Cooper, Chairman and Managing Director, Cooper Corporation Pvt. Ltd.