Inter-state GST could be implemented prior to the full-fledged GST. It would be a big step forward.
The Federation of Micro, Small and Medium Enterprises (FISME) in its budget recommendation to the Finance Ministry has recommended various aiding & enabling policy measures, here’s part 1 in the series.
- Tax Proposals
Inter-state GST in the interim to the GST
The need for GST does not need any elaboration. GoI is already working to buildthe political consensus and the required back-bone architecture enablingseamless movement of data in this regard. However, lack of inter-state GSTcontinues to be a major stumbling block in trading goods across states. Whensupplying to governments, absence of inter-state GST puts suppliers of thebuying state at a disadvantageous position vis-à-vis the suppliers of otherstates. With one of the largest share of public procurement in GDP, the impact ofthis aberration is immense. MSMEs are particularly affected adversely in thecurrent dispensation.
Inter-state GST could be implemented prior to the full-fledged GST. It would bea big step forward. We understand, the subject being in the central domain, themove does not require the Parliamentary approval.
Provisions of Advance Ruling announced in previous year budget is a welcome step. It can drastically reduce litigations and unnecessary waste ofentrepreneurs’ scarce energy.
To ensure the step serves the intended purpose, all rulings/decisions may beuploaded on a portal so that other assesses may also get the guidance from theruling.
Investment allowance on Capex
Section 80-I, investment allowance on capex was earlier allowed without anylower threshold. As tax benefit will accrue to the claimants only after each claimundergoes the scrutiny of the assessing officers, there should be no problem in administering the facility even in case of smaller capex. There is an urgent needto introduce tax breaks to promote employment generation on the same lines asdepreciation encourages capital investment. The capital intensive largeCompanies are thus able to save huge amounts on taxes, which in turn results incapital formation and strengthening the companieswith meager capital investmentsMSMEs on the other hand are neither able to save on taxes nor do capitalformation which leaves them vulnerable forever.
Section 80-I, investment allowance on capex should be without any lowerthreshold.