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BCIC seeks speedy acceptance of Shome Panel recommendations on GAAR

Source : BUSINESS_STANDARD
Last Updated: Sun, Jan 13, 2013 19:40 hrs
A shopkeeper counts Indian currency notes inside his shop in Jammu

In Indirect Taxes, BCIC has pointed out, the Taxation of Services under the Negative List Regime has unintended consequences and these should be ironed out forthwith.

The Bangalore Chamber of Industry and Commerce (BCIC) has urged the Centre to immediately accept the recommendations of the Parthasarathi Shome Committee on GAAR and retrospective amendments and the Rangachari Committee on Technology sector immediately.

In its Budget Wishlist 2013-14 submitted to Finance Minister P Chidambaram, the BCIC has said that the acceptance of these two committee recommendations would see business confidence spiking upwards. It has also urged the government to set up a task force so that the burden of litigation on taxpayers is significantly reduced.

K R Sekar, Chairman, Direct Taxes Committee, BCIC, said: "To start with, we urge the UPA government to immediately accept recommendations of the two committees' recommendations. To revive the manufacturing sector, we suggest measures for capital formation such as restoration of the general rate of depreciation for plant and machinery to 25 per cent; granting an investment allowance and allowing the entire additional depreciation in the first year. Tax incentives as recommended in the draft Manufacturing Policy should also be implemented forthwith."

He further said, "The current MAT rate, at 20 per cent, is almost two-third of the normal rate and singularly has the effect of negating the positive effects of the tax policy. We suggest that the MAT rate be one-third of the normal rate. Further, the SEZ profits should be kept outside the purview of MAT as was envisaged. Capital gains, which are otherwise exempt uos 10(38), should be excluded in computing the "book profits" for MAT."

P V Srinivasan, chairman, Indirect and State Taxes Expert Committee, BCIC, said, demands on the account of transfer pricing adjustments have seen a huge upswing causing extreme concerns amongst taxpayers. "We suggest the adoption of inter-quartile range instead of the present arithmetic mean to eliminate the ill-effects of skewness in data. Further, we urge that safe harbour rules and specified guidelines for carrying out adjustments be notified so that the certainty is enhanced and irrationality in adjustments checked," he said.

The chamber has also pointed that the infrastructure for Commissioner (Appeals), the first appellate authority, is inadequate and the same be urgently improved to enable speedy resolution of disputes in appeal. It has also suggested that the Dispute Resolution Panel should be an appellate forum instead of a pre-assessment forum.

In order to improve inflows of convertible foreign exchange into India, the BCIC has suggested exempting foreign dividends received from specified companies based on participation criteria.

BCIC has suggested the Section 35(2AB) weighted deduction be extended to the information technology sector and that training expenses in the sector be qualified for availing weighted deduction under Section 35CCD.

In Indirect Taxes, BCIC has pointed out that the Taxation of Services under the Negative List Regime has many unintended consequences and these should be ironed out forthwith. It has urged the government to ensure that there is no service tax liability in respect of any exports of services and the position prior to July 1, 2012, be restored.

Noting that there has been a trend in negating the provisions of Special Economic Zones Act, the BCIC has suggested that service tax exemption should be granted in respect of services exclusively consumed in SEZs and has also urged the government to bring about harmony in the mathematical formula for computing the refund.


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