In a bid to promote rural sales in the country, ASSOCHAM, the Associated Chambers of Commerce and Industry of India, has proposed doing away with the service tax for marketing and sales promotion activities in rural areas. This may be achieved by resetting rural sales as service tax exemption benchmark.

With various government schemes such as NREGA, Bharat Nirman and Indira Awas Yojana targeting the rural population as well as the lower tier cities of the country, the disposable income and thereby the purchasing power of this section is on the rise. By exempting sales and marketing activities and expenses from service tax, the government can achieve two goals in one stroke that of increasing rural sales and promoting inclusive growth.

ASSOCHAM President, Dr. Swati Piramal, submitted a memorandum to the Finance Minister detailing the proposal.

The memorandum argues that the demand for Indian industry products is on the rise in rural areas and this can be pushed further up by introducing service tax exemption.

The memorandum further says that the benefits of the exemption will not be restricted to rural buyers alone. It would eventually benefit manufactures of products too. Dr. Piramal said that the industry keeps detailed figures of its rural sales and marketing activities, which may be used by the government for granting service tax exemption.

Dr. Piramal pointed out that this move would be advantageous in preventing sales of fake products in rural areas, even as it increases the sale of quality branded products.

ASSOCHAM is also rooting for service tax exemption on transportation of agricultural products such as oil seeds, edible oil and de-oil cakes, as the country is facing a shortfall in their production.