WE hail the announcement in the subject that Goods and Services Tax Network (GSTN) will become operational by August 2012. The highly pro-active tax system which would subsume Central Excise, Service Tax and State Level Value Added Tax would provide the tax set off benefit to Trade and Industry even for the inter-state sales. As of now Traders cannot set off Service Tax paid by them in the Value Added Tax payable by them.
We have not fully recovered from the global level economic crisis of 2008 as evidenced by the Economic Survey 2011-12 and the manufacturing sectors growth rate has slipped down to 3.9 percent with a low contribution of 27 percent to GDP.
The service sector is contributing 59 percent to GDP with a growth rate of 9.4 percent and the inclusion of all services barring the negative list would fetch more revenue to the Exchequer. Under such circumstances, there is no justification for raising the Service Tax Rate and standard rate of Excise Duty from 10 percent to 12 percent at this stage as it will further burden the domestic industries and service providers and increase the cost of products and services and escalate the inflationary trend. The proposal to tax all services except those in the negative list would lead to confusion and lead to unnecessary litigations and put entrepreneurs at the mercy of the tax officials. However, the proposal to introduce Advance Ruling system in Central Excise levy and Service Tax will considerably reduce litigations.
Expansion of the Central Plan Scheme Monitoring System to facilitate better tracking and utilization of funds released by the Central Govt. is a pro-active proposal to be set in motion to monitor and streamline host of centrally sponsored schemes. More allocation of funds for agriculture and rural drinking water and sanitation and also for education set apart in the Budget reflects the Finance Ministers commitment to more inclusive growth by providing the much needed momentum for enhancing agriculture production, and improving rural health care and education.
Yet another laudable feature of the Budget is the slew of measures proposed to detect generation and use of unaccounted money and the decision to prepare a White Paper on black money to be laid in the current section of Parliament. It is fondly hoped that the names of corrupt politicians, bureaucrats and others who have accumulated crores and crores of rupees of unaccounted money and stealthily deposited in foreign banks and the efforts of the Govt. to bring them back to our country would be revealed in the White Paper.
Enhancement of the threshold for personal income tax marginally from 1.80 lakhs to 2 lakhs has belied the general expectation of the people. The Finance Minister should have opted for increasing the limit at least to ` 2.5 lakhs. However, raising of the upper limit of 20 percent tax slab from 8 lakhs to 10 lakhs and the proposal to make interest from Savings Bank accounts deductible upto 10 thousand provide some consolation.
Tamilnadu Chamber of Commerce and Industry is grateful to the Finance Minister for conceding its demand by increasing the turnover limit for compulsory audit of accounts for SMEs and presumptive taxation from ` 60 lakhs to ` 1 crore. The Govts. approval of a policy under which Ministries and Central Public Sector Enterprises are required to make a minimum of 20 percent of the annual purchase from SMEs would stimulate market access of Micro and Small Enterprises in the country.
The proposal in the Budget to bring down the Excise Duty rate from 10 percent to 6 percent for semi-mechanized safety match units which was based on the specific request made by TN Chamber will provide the much needed relief to such units facing near extinction in Tamilnadu.
The Finance Minister has announced that entry of FDI in multi-brand retail will be allowed only after creating consensus with states. We sincerely hope that the Tamilnadu Chief Minister Dr. J. Jayalalithaa, West Bengal Chief Minister Selvi Mamta Banerjee, BJP and Left Parties would continue to oppose entry of FDI in multi-brand retail and support the existing domestic retail trade.
By and large, the seventh Union Budget presented by the Finance Minister Shri Pranab Mukherjee is an all inclusive Budget with growth and development adequately balanced which would certainly retrieve the economic growth.