By IANS
Bhopal : Welcoming the union budget for 2008-09, the Madhya Pradesh unit of the PHD Chamber of Commerce and Industry (PHDCCI) said it was a boon for all in general and the state in particular.
“Though political considerations have clearly dominated the economic decision-making – particularly while writing off the huge debt of farmers, the reduction in General Cenvat rate from 16 percent to 14 percent is a step in the right direction,” said PHDCCI regional director Rajendra Kothari.
“It will have twin advantages – stimulate industrial activity through demand and a step towards convergence of the Cenvat (excise duty) rate with the service tax rate for GST (Goods and Service Tax) implementation,” he added.
Lauding Finance Minister P. Chidambaram for giving special consideration to agriculture, education and health in a move to promote inclusive growth, the chamber said some positive features for the manufacturing sector, such as reduction in excise, status quo in peak customs duties, deductions for R&D and innovation initiated by industry too are commendable.
“The removal of NCCD (custom duty) on polyester filaments yarn was overdue and will rationalize the duty structure on the same”, Kothari said.
Similarly, the continuation of the peak rate custom duty at 10 percent – due to rupee appreciation – is a welcome step and so is reduction of duty on project imports to five percent will bring down the cost of projects.
However, the levy of service tax on customized software and increase in excise duty on packaged software to 12 percent, Kothari said, should have been avoided, as it will impact the competitiveness of our industry.
“The industry was also expecting that service tax on commercial rentals will be removed as assesses are not able to take Cenvat credit on the same,” he said.
The GST has to be implemented in the country by 2010. The industry was expecting that a concrete roadmap would be announced in this budget as a Joint Working Group and the Empowered Committee of State Finance Ministers have done a lot of work.
The PHD Chamber said that restructuring of income tax slabs for individuals, particularly the increase in the threshold of the basic exemption limit from Rs.110,000 to Rs.150,000 is a welcome measure and it would provide a much needed relief to the individual tax payers.
However, the corporate sector is disappointed that the high tax burden on companies which is eroding their competitiveness in the globalised environment has not been addressed. It was looking forward to at least the abolition of surcharge, particularly in view of the buoyancy in tax revenues.
Many other important issues such as Fringe Benefit Tax on genuine business expenses and lowering of dividend distribution tax have also not been addressed. Enhancement in tax on short-term capital gains may further dampen the market sentiments.