JUNE 29, 2009

Last-minute 'wish list' for Budget 2009

By M G Venugopalan, Former Member, CBEC

IT is too late in the day to file any representation on this year's budget. The FM would have by now finalized the menu for the ‘ budget lunch' and the chefs from TPL/TRU would be almost through the job. Now only the chefs can taste the dishes in their privacy and convey their assessment to FS/FM. Still some last minute touch ups can be made so that the dishes cooked more palatable. Here are some suggestions for Pranabda to try!

Direct taxes

(i) Public expectations raised on increase of general exemption limit to Rs. 3 lakhs are well known. If the ‘fiscal experts' have advised the FM against raising the limit, there is still time to change FM's mind and heed to the public demand.

(ii) In addition to the above, exempt 50% of the pensions disbursed to pensioners beyond 70 years of age , and 100% of the pension disbursed to pensioners beyond 80 years and entire pensions granted to martyr's widows/freedom fighters from the taxable income as an extra social security measure to senior citizens and deprived sections of our society.

(ii) An area of taxation causing enormous irritation to small tax payers is the condition regarding Audit certification of books of accounts/returns. Kindly raise the limit for audit certification to gross income above Rs. one crore. Over 90 percentage of the taxpayers would benefited out this measure and this would ease tax compliance enormously.

(iv) As a bold challenge to tackling of the black economy, exempt without limit all investments made into infrastructural bonds, RBI Bonds etc which are solely utilized for public investment.

(v) As an effective measure against global warming and promotion of non-conventional energy sources, income tax exemption may be granted to all investments made upto Rs.Five lakhs per annum on installation of domestic solar water heaters, solar cookers, Solar/wind energy generators, installation of solar lamps for lighting public premises, roads etc.

Central Excise

(i) Excise duty on all manufactured goods may be raised to a uniform level of 10% and withdraw all end use/geographical area based exemptions totally as a measure to control the looming fiscal deficit.

(ii) Introduce a grandfather clause in respect of Small Scale industries exemption so that no unit can avail it beyond 10 years of its inception. In order to prevent fragmentation of existing SSI Units and other devious efforts to defeat the measure, if an existing SSI Unit is closed no fresh license/registration need be granted to start a new SSI unit in the same premises for a minimum period one year.

(iii) As a measure against gross misuse of CENVAT credit facility let a cap be introduced so that the credit availment by any assessee in any month may not exceed the amount of CENVAT payment by cash/cheque.

Customs

i) In order to boost agricultural productivity full customs duty exemption may be granted to import of all farm equipments that are not manufactured in our country such as mini tractors, seeders, harvesters, solar pumps, micro nutrients, seeds, plantlets etc by Govt/ public sector corporations for sale to farmers.

(ii) Raise duty free baggage allowance to Rs. 50,000/- per passenger as a measure to further smoothen customs clearance process in our airports. At the same time, the customs duty on excess baggage items may be raised to 100% of the cif value, in order curb the tendency to smuggle jewelry, consumer goods etc in commercial quantities through baggage.

(iii) Customs duty exemption/concessional duty of 5% may be allowed to the import cornea, prosthetics, hearing aid, wheel chairs, specially fitted ambulances, cardiac catheter, human organs ,blood etc as a measure of extending medical treatment affordable to common people.

SERVICE TAX.

The present service tax legislation has become very complex and confusing even to professional tax consultants and it has become a nightmare to tax payers. Tax compliance is deterred due to this factor alone.

(i) Extend service tax coverage comprehensively to the entire service sector unless covered by the specified ‘negative list' or ‘ exempted services'.

(ii) Add a miscellaneous entry into the list of taxable services ‘not otherwise specified' to cover all other services that are not covered.

(iii) Merge the rate of Excise duty and service tax uniformly at 10% so that when GST is introduced in 2010 there would no incongruity in rates/credit availment.

(iv) Do everything possible in law and procedure to ease tax compliance. Let “ease of tax compliance” be the ‘watch word' to determine introduction of any new taxation measures in the country.