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NEW DELHI: The president of Ficci, H Khorakiwala, I congratulated the finance minister’s “terrific budget” on the social sector front, but said he has lost an opportunity due to the indirect taxes imposed, which has given a wrong signal to the corporate world. He specially lauded increased spendings on health, education and agriculture, and also the GDP spending that has been raised. He said however that the corporate sector is not happy with the indirect and direct tax burdens, especially various instances of multiple taxation, and it would have been better had he taken measures to ensure keeping the growth rate at 9.2 per cent. Responding to a question, he refused to term this as an anti-growth budget, stressing that not that there will be no growth, but it would have been better had he taken this opportunity. He also said that the inclusive economic development is sustainable in the long term. There will be somewhat retardation in the IT sector due to the taxes imposed and this is a disappointment for the sector. Ficci Secretary General Dr Amit Mitra further clarified the body’s stand, saying that it is not as if the 9 per cent growth rate will slow down, because that has happened due to the private sector and corporates, as well as public participation, but the industry had expected something in the budget that would perhaps push the growth rate beyond what is there now, to 10 per cent. “That is an opportunity that the finance minister has missed and this is disappointing,” he said. Specifically on the IT sector, Mitra held the imposition of MAT is “too premature. The government could have done this when the IT industry would turn more mature, when we started dealing with imbedded technologies, rather than the preliminary technology we are dealing with now. He also said that the tax on stock options for employees is also a deterrent for the industry. “The government could have lowered taxes and asked for better collection and that would have helped industry, since the minister admitted that tax collection has increased. Instead, he imposed taxes, which is not the right thing. However, he said that the reduction of the fiscal deficit, “for the first time in 25 years, will help curb inflation, added with the benefits that the farm sector has been given, which lies at the core of inflation. |
Tag: components
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Ficci faults increase in indirect taxes as wrong signal to corporates
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Trai pitches for duty slash on STB components, seeks removal of entertainment tax on cable TV
NEW DELHI: The Telecom Regulatory Authority of India (Trai) has take up the demands of stakeholders in the broadcasting industry and recommended to the Finance Ministry that there is a need for tax rationalisation. The chief amongst which is abolishing of customs duty on import of components for the local manufacture of STBs.
MSO sources tell indiantelevison.com that Trai has suggested to the ministry that it should ensure a level playing field in the interest of digitalisation of cable television, which has seen increased demand after the rollout of Cas.
For the benefit of the consumers, Trai has also suggested that Entertainment Tax be abolished from the cable TV sector.
Trai has argued, as the MSOs had desired, that this is the only industry in which both service tax and entertainment tax are levied, the latter going to the state governments, and suggested that instead of the extra entertainment tax burden, there should be evolved a system of sharing a part of the service tax with the state governments.
These sources say also that Trai has for the first time written to the government of the reports the industry has been filing since the middle of January this year, that after Cas rollout, the interest in digitalised TV has vastly increased, and Trai says that there are requests from areas not covered under mandatory Cas for the same system being introduced.
The issues were discussed in a roundtable between Trai, the MSOs and other stakeholders earlier this month.
Trai has written to the government, sources requesting anonymity tell indiantelevision.com, that the stakeholders desire rationalisation of tax structure, because greater convergence in broadcast and telecommunication technologies in the near future would result in the distinction between the two services getting increasingly blurred.
Hence the need for a level playing field, which in turn could not be brought about without required rationalisation of taxation in the two sectors.
Trai feels that the current additional customs duty of 4 per cent on components of set top boxes and associated items like viewing cards should be abolished, just as has been done for the components and parts of cellular phones and mobile phones.
The Trai wishlist sent to the MoF, sources say, recommends the complete removal of basic customs duty on imported digital headend equipment from the present 12.5 per cent, to improve penetration in the country as a whole.
Trai says this is quite in line with the abolition of duty on import of STBs done in 2006.
The MSOs say that they had desired that though excise duty is currently levied on the transaction value of STBs, which are sold as packaged commodity, in the same manner as mobile phones, televisions and cameras, but wherever required manufacturers may be given the option for the scheme on which excise duty is levied on the basis of MRP, with an abatement of 40 per cent.
Presently, this is applicable to other packaged commodities, and Trai has sent this as part of the recommendation to the ministry as well.
In consonance with the wishes of the MSOs and other stakeholders, Trai has also suggested that the telecom department has demanded reduction of excise duty on telecom equipment to 8 per cent, and this same should be applicable to manufacture of STBs.
The stakeholders had told Trai that this would be necessary because with greater convergence of technologies, it would be tough to distinguish between the services.
There is another tricky issue on excise duty. MSOs say that the premises of the subscriber where the set top box is deployed should be treated as the extended premises of the service provider and the STBs at the premises of the subscriber be treated as the possession of the service provider.
This would enable them to avail a set-off of excise duty paid, against its service tax liability.