The government must roll out the Goods and Services Tax (GST) from April 2016 as it is likely to boost economic growth by 2 per cent, Godrej Group chairman Adi Godrej said on Tuesday.
"Other things being equal the implementation of GST (from April 2016) will add 2 per cent to the GDP growth rate. This will also benefit manufacturing and exports," he said.
Besides, Mr Godrej said the Minimum Alternate Tax (MAT) rate, which currently stands at 18.5 per cent, must be halved.
"This will enable companies to take greater advantage of the benefits of the incentives and invest more in manufacturing. This will also increase growth in GDP," he added.
Mr Godrej also pitched for more incentives for the manufacturing sector in the upcoming Budget.
"This is a very good time to increase incentives to the manufacturing sector which will aid growth. This will also encourage investments from Indian and foreign companies. Future disinvestments and lower subsidies in the next year will help control the fiscal deficit to a large extent," he said.
Finance Minister Arun Jaitley will unveil the Budget for 2015-16 on February 28.
Meanwhile, PHD Chamber of Commerce said that Mr Jaitley must unveil measures to generate jobs, stimulate demand and spur investments to boost economic growth.
"The inverted duty structure, which is a major deterrent for manufacturing in India, should be completely corrected as domestically-produced goods cost more than imported ones."
"The high transaction costs, both in terms of time taken and the money involved, are adversely impacting manufacturing competitiveness and overall business performance, the budget must provide provisions for reducing transaction costs," PHD chamber said in a statement.
Besides, it urged the government to promote collateral free lending for MSMEs, where appropriate qualitative grading of promoters and projects should be available.
"One of the biggest issues that SMEs face is financing. Most of the MSME segment has problem of collateral, they should get financing upto a certain level without any collateral," PHD Chamber president Alok B Shriram said.
The chamber said that Minimum Alternate Tax rate should be reduced to 10 per cent from the prevailing 18.5 per cent, while the corporate tax rate, which works out to be 34 per cent for most companies, must be lowered to 25 per cent in the Budget.
It also urged the government to defer General Anti Avoidance Rules by one year, from April 1, 2016, instead of April this year, so that it starts from assessment year 2017-18. As per the existing proposal, investments made after March 2013 will be covered under GAAR with effect from assessment year 2016-17.
It also urged the government to provide a clear roadmap on Goods and Services Tax (GST), and direct the divestment proceeds towards infrastructure sector.
Government must end subsidies and the Direct Benefit Transfer scheme must be promoted for individuals, it said.