During the last few months, the Indian Government has taken many positive steps to come out with relief and reform measures to manage the impact of Covid-19 Pandemic on Economy and industry.
CII recommendations for Union Budget 2021-22 take cognizance of the stressed fiscal situation, on account of a sharp decline in revenue collections due to the COVID induced economic slowdown. The recommendations on taxes are focused on clarity in law, simplification of procedures, reduction of litigation and facilitating business transitions which would make doing business easier for the industry.
Section 80JJAA, provides for deduction of 30% on emoluments paid to new employees, which can be claimed for three years. This is available upto an emolument of INR 25,000 per month. Stressing on the need to give boost to employment at higher levels, CII has suggested to raise the cap to INR 50,000 per month to encourage employment in higher skilled jobs as well.
Over last few years, it is seen that in order to enhance the financial strength / soundness of banks, and for the stability of the financial sector, RBI has mandated that banks should augment their NPA provisioning. CII has suggested that the limit prescribed under section 36(1)(viia)(a) for provision for bad and doubtful debts for Indian Banks should be increased from the existing limit of 8.5% to 15%”
Banks operating in India facilitate foreign investment by Foreign Portfolio Investments (‘FPIs’) by acting as custodians (cash and securities) for the FPIs investing in India. Specific clarification should be provided so that banking and broking service providers are not held as representative assessees of their clients. Over the years, RBI has lowered the limit for recognizing an account as NPA from 6 months to 90 days. Rule 6EA should be amended to provide that in case of banks, the interest on NPA which has become overdue for more than 90 days should be excluded from the total income and be taxed only on receipt basis.
Covid induced a global economic downturn that is fraught with severe challenges, but India is looking to use this crisis and not let it go waste by developing policies that create opportunities for India. Prime Minister’s vision on Atmanirbhar Bharat has provided thrust to Make in India stressing on value addition will help India transform itself to become World’s Factory and Office.
Following the vision of the Hon’ble Prime Minister, CII proposes a set of general principles to guide the import tariff structure along with a roadmap to encourage and calibrate domestic manufacturing in alignment with global trade trends that would strengthen its manufacturing capacities and boost its export competitiveness as per shifting global value chains in the next 3 to 5 years.
CII suggests a graded roadmap towards competitive import tariffs over next 3 years, with lowest or nil slab 0-2.5% for inputs or raw materials, highest slab of 5 – 7.5% for final products and 2.5 to 5% for intermediates. This will help Indian industry integrate into the global value chain while becoming competitive with its goods and services in the world markets.
All the above initiatives would go a long way in bringing growth back to the economy and moving once step ahead towards a taxpayer friendly regime.
