New Delhi: The ASSOCHAM in its pre-budget interaction with mandarins of finance ministry including Revenue Secretary urged the government not to levy dividend distribution tax when dividend is received by an Indian company is subsidiary of another company as it will remove cascading effect of dividend distribution tax (DDT). It was also highlighted significant issues that industry faces on both Direct and Indirect Taxes. Together with this issue ASSOCHAM also urged to do away with system of disallowance of half per cent of value of investment in rule 8D which is inequity and dubbed it too harsh to implement.
Other issues discussed with the ministry were tax payers whose tax deducted in large number of transactions should be allowed with the facility to pay additional advance tax based on previous years TDS and be given the certificate for receiving payments without deduction of tax as this would lower the administrative burden of verification and paper work, the apex body added. Further emphasis was made on creation of more branches of authority for ADVANCE RULLINNG be considered for providing certainty to the tax payers and preventing possible disputes, asked the ministry to extend this facility to the domestic companies.
On indirect tax segment the apex body expressed its concern for the Union Budget 2009 and 2010 the CNVET credit rules were amended to exclude cement, channels, CTD bars, TMT bar, and other items use for construction of factory shed building or rain foundation or making a structures for support of capital goods, from the definition of” inputs” accordingly CENVET credit is not available on these items, and ASSOCHAM suggested some recommendations to suitably amend or a notification or circular be issued to state that CENVET credit is eligible on all items used in relation to business activity.
Similarly on Central Excise provision that is providing for packaging and repackaging activity carried out in respect of the goods subsequent to manufacturing has been held to be a deemed manufacturing. ASSOCHAM has made recommendation to suitably make amendments in the current provisions to keep the activity of packaging and repackaging carried out by the retailers or wholesalers outside the provisions of central excise.
Further on the benefit of concessional CST rate over the purchase of capital goods be allowed for the service sector to enable significant reduction in the cost of operations for the service sector, to benefit the emerging retail sector. ASSOCHAM also made some recommendations that the facility of centralized registration for non-assesses not intending to claim any excise duty benefit be permitted to avoid the extra burden of the excise procedures on the non-assesses.
On the Service Tax segment ASSOCHAM urged the finance ministry with its recommendations and stressed that the Service tax on rentals impacting broadly the retail sector, be either exempted or alternatively some abatement be allowed to this sector, in order to reduce the cascading effect of service tax in the retail trading operations.
Further it was also stressed that Employees Stock Options Plan (ESOP) be linked to the time when cash flow is available to the employee, in the case where large number of tax deduction and option should include tax payers to pay required advance tax and obtain nill TDS certificate. Last but not least ASSOCHASM urged the finance ministry to do some thing to service providers to be able to purchase capital goods against C form especially in the field of infrastructure.