CII wants Investment Budget

By Vijay Kumar

CII's Pre-Budget Memorandum, presented to the Ministry of Finance, recommended that Budget 2009-10 should be an 'Investment Budget' to enable India to deal with the global economic crisis and aim at leading the economy to a 8% plus growth in the coming year.

The CII Memorandum additionally emphasized promoting investments by sending a clear message to investors that India's tax policies are consistent and have continuity. Investment allowance should be re-introduced to encourage front-loading of investments. However, to simplify and streamline the tax structure, CII suggests that surcharges, cesses, FBT and MAT should be abolished.

To fuel domestic consumption as a growth accelerator, the CII Memorandum calls for easing individual tax exemption limits by a further Rs 50,000 and removing retirement fund limits. It suggests that limits allowed under section 80C to Individuals and HUF should be raised to Rs. 2 lakh, provided the additional Rs. 1 lakh savings is in infrastructure bonds.

The key direct tax recommendations of the CII memorandum include increasing depreciation rates for plant and machinery from 15% to 25%, and introducing an Investment Allowance package for businesses for cost savings. For export units, removal of sunset clause for STP units under section 10A and EOU under section 10B is suggested. Credit Linked Subsidy Scheme (CLCSS) for Technology upgradation for MSMEs needs to continue and be extended for all possible technical upgradations / modernisations.

On indirect taxes front, the CII memorandum strongly stresses that Goods and Services Tax should be implemented on schedule on April 1, 2010, adding that a single unified rate of 12% would spur creation of a unified single market. In preparation for introduction of GST, CST rate should be brought down to 1%.

The CII memorandum also calls for continuation of 8% excise duty in general and reduction of excise duty from 16% to 8% on medicines covered under Medical and Toilet Preparation (M&TP) Act. Service tax payment in case of comprehensive annual maintenance contracts should be simplified by charging on a specified percentage value of the contract.

The Union Finance Minister, Pranab Mukherjee meeting with Industrialists, in New Delhi on June 01, 2009. The Ministers of State for Finance, Namo Narain Meena and S.S. Palanimanickam are also seen along with Revenue Secretary Bhide.