PHDCCI calls for tax reduction on manufacturing

New Delhi, Jan 10 (UNI) The 35 per cent Central and state levies on goods is the prime cause of restricting competitiveness and growth of manufacturing sector, an industry body said today.

The levies also encourage tax evasion and reduce compliance level in the country, acoording to PHDCCI.

In the pre-budget memorandum submitted to the Union Finance Minister, PHDCCI President Sanjay Bhatia has suggested that the excise duty rate should converge to 10 per cent from the existing standard CENVAT rate of 16 per cent.

The reduction in the rate of tax will improve the competitiveness of Indian industry both at the domestic and global level.

Mr Bhatia has further recommended that keeping in view the thrust on simplification of the tax laws now for better compliance and easier administration, it is desirable to enact the Goods and Service Tax legislation in order to levy the goods and service tax at least at the level of the Central Government.

This would also signal commitment of the Central Government to implement Goods and Service Tax at national level comprising of CENVAT, State Vat and Service Tax. In the 2007-08 Budget the government should announce the road map for implementation of GST by 2010, the chamber stated.

As for the road map of Customs duties, the chamber head has urged the Union Finance Minister to fix the Customs Tariff taking into consideration all non-Cenvatable indirect taxes and local levies that reduce the level of protection on domestic industry.

In this connection PHDCCI supports the Ladder System of Customs duty to promote domestic value addition with a rate of 2.5 per cent on raw materials, 7.5 per cent on intermediate goods and 10 per for finished goods.

The objective of the Customs duty should be to provide due protection to the domestic industry, promote domestic value addition and thereby stimulate economic and industrial activity in the country, it said.

With the implementation of GST, the concessions, incentives, benefits and exemptions will get minimised. However, essential exemptions and benefits based on national priority will have to be there. This is an international phenomenon and even in advanced countries exemptions and concessions are part of their taxation policy, Mr Bhatia added.

He has said that there is a need to bring uniformity in the tax rates under the VAT system. ''The states are still continuing with entry tax, special entry tax, cess and infrastructure fee. Under tne VAT system all taxes, levies and cess should be integrated.'' The chamber has also called for a simple, transparent and stable tax policy and rationalisation. Various taxes like education cess, national calamity and contingency duty should be done away.

Amendments with retrospective effect should be avoided and tax administration should be taxpayer friendly, it has suggested.

UNI