Assocham seeks excise duty and service tax cut to spur economy
December, 04th 2012
Industry body Assocham has demanded a cut in excise duty and service tax to 8% and increase in personal exemption limit to spur slowing economy.
In its pre-budget memorandum, the business chamber asked the government for measures to revive consumer demand and perk up investment. The finance ministry has set the ball rolling for the next budget and begun pre-budget discussions with industry bodies.
All the leading chambers including CII, Assocham and Ficci will have their pre-budget discussions with the finance ministry officials next week.
"In the current economic environment of falling GDP growth and recession in many parts of the global market, it is crucial that Budget addresses indirect tax issues currently facing industry and services sector," Assocham President R N Dhoot said.
He said the excise duty and service tax rates should be cut to 8%. The government had raised excise duty and service tax by 2% in the last budget to 12%.
"This move will give a very big boost to the Indian industry," he said.
The Indian economy grew by 5.3% in the July-September 2012-13, pulled down by poor performance of manufacturing and agriculture sectors.
Dhoot also sought reduction in corporate tax rate to 25% from 30%, and infrastructure status for special economic zones and industrial parks.
Asked if these demands were realistic on the back of high fiscal deficit, he said the tax base for goods and services has already expanded to generate high revenue.
"The government can selectively increase customs duty rates to neutralise the effect of lower tax rate of excise duty and service tax," he said on Monday.
Justifying the demand for tax reduction, Dhoot said at a time when the global economy is passing through tough times, industry is facing competitive disadvantages.
This was due to complex multi-layered indirect tax structure which is having an cascading effect on cost and prolonged tax litigation, it said.