Uttarakhand industries ask centre for encouragement of MSMEs
Updated: Feb 26, 2015 01:49:50pm
Dehradun, Feb 26 (KNN) The Industries Association of Uttarakhand in their wish list for the Union Budget 2015-16 suggested the central government that micro, small and medium enterprises (MSMEs) should be part of the reforms as done in all sectors for overall development.
“Reforms in all sectors for growth are being done in consultation with stakeholders like, financial reforms, taxation reforms, labour reforms, administrative reforms, electoral reforms and others. ‘Make in India’ is now the growth engine but MSMEs should be part of the same for inclusive development. In order to boost employment generation, small industries have to be encouraged by providing necessary policy and other supports.” it said.
In its recommendation, the industry body suggested that there should be income tax exemption for 5 years for new MSMEs in the country.
It emphasised recommendation on tax incentives for reinvestment in the enterprise.
“On a year to year basis if the tax revenue of any MSME enterprise grows by 10 per cent than it should be subjected to normal of taxation policy but if the performance is more than 10 per cent and upto 12 per cent than on this plus 2 per cent, no tax be levied and it should be allowed to retained him as an Investment Incentive,” said IAU.
Similarly, between 12 per cent to14 per cent, tax on 2 per cent be levied at 25 per cent of the normal rate of tax and rest be allowed to retained by him as investment incentive and above 14 per cent he should be allowed to retain 50 per cent of tax amount as Investment Incentive. But this concession will only be allowed if he makes investment, it said.
IAU also suggested that SIDBI should be made a fully-fledged bank.
“Government of India has given a couple of bank licenses for starting new banks. One such license should also be given to SIDBI but its focus as bank of MSME sector should be maintained,” it said.
In order to bring down the cost of lending to MSME sector, IAU suggested some majors from central government to support SIDBI. It said the guarantee fee structure for financial institutions should be lower, central government should part offset the hedging cost to lower the cost of funds SIDBI borrowed from international agencies, SIDBI should be exempted from paying Income tax for next 5 years and this portion of income tax should be pass on to lower rate of interest.
All institutional primary sector short falls should on regular basis flow to SIDBI so that it has more funds at slightly lower rates to fund MSME Sector, it said.
In order to overcome the difficult global situations and for growth of more MSME sector for employment generation in the country, the association suggested interest subversion of 2 per cent to all MSMEs in the country.
In its wish list, IAU mentioned other suggestions including direct taxes, indirect taxes and service taxes recommendations.
Regarding to direct tax, IAU recommended rationalization of tax regime through speedy implementation of Direct Taxes Code (DTC) and streamlining tax rates.
For indirect tax, it suggested to simplify tax structure and introduce GST, a simple and easy to adopt at the earliest in consultation with states. Constitute a high power task force with representatives of Industry for this purpose, with time-bound action plan. RNR under GST should not be more than 16 and with least number of exemptions.
It also suggested for reduction of excise and service tax rates by 2 per cent to boost growth and control inflation.
Considering service tax, IAU recommended that reverse charge reverse charge mechanism should be made applicable only in case of import of service and not otherwise. Further, the option for payment of service tax may be provided with the service provider.
To avoid double taxation on the same service, service tax laws need to be amended to the effect that once the tax liability is discharged by a service provider or a service recipient, service tax cannot be demanded once again from the other party in respect of the same taxable service, it said.
The industry body suggested the central government for extending help to sick industries in making excise and service tax payments.
It also suggested to amend Section 35G of the Central Excise Act to refer to question of law directly to High Court or CBEC, departmental adjudication and personal hearing and terror taxation - invoking section 78A for the past period. (KNN/ST)
“Reforms in all sectors for growth are being done in consultation with stakeholders like, financial reforms, taxation reforms, labour reforms, administrative reforms, electoral reforms and others. ‘Make in India’ is now the growth engine but MSMEs should be part of the same for inclusive development. In order to boost employment generation, small industries have to be encouraged by providing necessary policy and other supports.” it said.
In its recommendation, the industry body suggested that there should be income tax exemption for 5 years for new MSMEs in the country.
It emphasised recommendation on tax incentives for reinvestment in the enterprise.
“On a year to year basis if the tax revenue of any MSME enterprise grows by 10 per cent than it should be subjected to normal of taxation policy but if the performance is more than 10 per cent and upto 12 per cent than on this plus 2 per cent, no tax be levied and it should be allowed to retained him as an Investment Incentive,” said IAU.
Similarly, between 12 per cent to14 per cent, tax on 2 per cent be levied at 25 per cent of the normal rate of tax and rest be allowed to retained by him as investment incentive and above 14 per cent he should be allowed to retain 50 per cent of tax amount as Investment Incentive. But this concession will only be allowed if he makes investment, it said.
IAU also suggested that SIDBI should be made a fully-fledged bank.
“Government of India has given a couple of bank licenses for starting new banks. One such license should also be given to SIDBI but its focus as bank of MSME sector should be maintained,” it said.
In order to bring down the cost of lending to MSME sector, IAU suggested some majors from central government to support SIDBI. It said the guarantee fee structure for financial institutions should be lower, central government should part offset the hedging cost to lower the cost of funds SIDBI borrowed from international agencies, SIDBI should be exempted from paying Income tax for next 5 years and this portion of income tax should be pass on to lower rate of interest.
All institutional primary sector short falls should on regular basis flow to SIDBI so that it has more funds at slightly lower rates to fund MSME Sector, it said.
In order to overcome the difficult global situations and for growth of more MSME sector for employment generation in the country, the association suggested interest subversion of 2 per cent to all MSMEs in the country.
In its wish list, IAU mentioned other suggestions including direct taxes, indirect taxes and service taxes recommendations.
Regarding to direct tax, IAU recommended rationalization of tax regime through speedy implementation of Direct Taxes Code (DTC) and streamlining tax rates.
For indirect tax, it suggested to simplify tax structure and introduce GST, a simple and easy to adopt at the earliest in consultation with states. Constitute a high power task force with representatives of Industry for this purpose, with time-bound action plan. RNR under GST should not be more than 16 and with least number of exemptions.
It also suggested for reduction of excise and service tax rates by 2 per cent to boost growth and control inflation.
Considering service tax, IAU recommended that reverse charge reverse charge mechanism should be made applicable only in case of import of service and not otherwise. Further, the option for payment of service tax may be provided with the service provider.
To avoid double taxation on the same service, service tax laws need to be amended to the effect that once the tax liability is discharged by a service provider or a service recipient, service tax cannot be demanded once again from the other party in respect of the same taxable service, it said.
The industry body suggested the central government for extending help to sick industries in making excise and service tax payments.
It also suggested to amend Section 35G of the Central Excise Act to refer to question of law directly to High Court or CBEC, departmental adjudication and personal hearing and terror taxation - invoking section 78A for the past period. (KNN/ST)
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