sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Indirect Tax »
 Top 30 Income Tax Judgments in 2018
 Urban Development and Housing Department, Chakradharpur, Jharkhand
 National Rural Health Mission, Faridabad - Haryana
  Govt fails to release exporters’ pending sales tax refund claims
 Govt fails to release exporters’ pending sales tax refund claims
 How is dividend income taxed Here’s all you need to know
 How is dividend income taxed Here’s all you need to know
 How is dividend income taxed Here’s all you need to know
 Several records missing from Income Tax department, CIC told
  Indirect tax evasion cases post a decline in FY18-19
 Income tax return revision: How many times can a return be revised? Find out

The government should pursue indirect tax reforms for fiscal consolidation
February, 02nd 2012

The government reportedly plans to exit from the fiscal stimulus of 2008-09 delivered through cuts in excise duties and service tax. This is welcome.

Just as boosting demand was what the economy required when the global financial crisis struck, the need now is to cut excess demand posed by government consumption. That means fiscal consolidation. An uncertain global environment should not hold back the government from reversing the cut in indirect tax rates in Budget 2012.

Agreed, growth has slowed down due to lower investment and external demand. Our economy is projected to grow by 7.2% in 2011-12 against the original forecast of 9%. However, inflationary expectations continue to be high, making it imperative for the government to exit the stimulus. Large fiscal deficits are simply unsustainable and are part of the environment of uncertainty that deters investment and depresses growth.

So, raising indirect tax rates should be a priority. The government should also move swiftly to a goods and services tax (GST). Rates closer to 10% each for the central and state GST makes sense, to start with. It would be lower than the total cascading indirect tax burden now of around 44% for goods that do not evade tax. A revenue bonanza is certain once all production is captured through the tax net. GST rates can be lowered later.

Reforms in customs duty are also in order to make our industry more competitive. Domestic industry is enjoying more protection now due to a slide in the rupee. Therefore, it is the right time for an across-the-board cut in peak import duty to the Asean level of 5%.

Ideally, customs duties on all goods should be harmonised to a uniform 5%, except for petroleum products, where the duty should be a uniform 2.5% on crude and products. This would lower the huge levels of protection the minimal value addition in refining enjoys.

The duty on crude would generate much needed revenue, to reduce the fiscal deficit. And the lower duty on products would permit independent marketing of fuels through imports, if the government opens up retail of petro-fuels as it should. Such duty changes would help contain inflation as well.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2019 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions