CII wants 30% depreciation for Plant and Machinery
AT a time when investment expansion in the economy has been spiralling down, the Confederation of Indian Industry (CII) in its pre-Budget memorandum has emphasized on its earliest revival through necessary policy interventions. "Given that the scope of fiscal and monetary manoeuvrability is limited owing to widening fiscal deficit and inflation, the revival in investment growth has to essentially come from private sector and the Union Budget for next fiscal can do a lot in this direction"
In the wake of deteriorating fiscal health of the Union Government, CII wants the Union Budget to announce initiatives that can accelerate the pace of private investments.
Among various measures, CII has recommended that depreciation rates for plant and machinery be raised from 15% to 30%, at least for a period of two years to encourage more capital investment. "It is a well-known fact that technology is changing very fast and unless we are able to replace our assets accordingly, we cannot match with other countries in terms of productivity”. Besides, this is a sure shot measure to kick start investments, according to CII. Besides, CII advocates a higher depreciation rate of 50% in case of retrofitting technologies, which are more energy efficient and environment friendly in order to encourage companies to go green. There is also a strong need for retaining the current rates of excise and service tax to spur investment by industry.
CII also recommends that money received from sale of an asset be exempted from capital gains tax if the same is reinvested in setting up new business or expansion of existing unit. Such a move would make available investible resources for use by industry.
To incentivize companies to go in for R&D, CII favours that a weighted deduction of 200 percent on in-house R&D be extended to all sectors in order to make India an attractive base for R&D.