New Delhi, Nov 21 (UNI) To achieve a higher and sustained growth rate, India needs to initiate Goods and Services Tax (GST), which will help in making the country a common economic market and global headquarters of business enterprises, according to an industry chamber.
Industry body Assocham has proposed to initiate the process of implementing GST, reduction in the excise duty rates, rationalisation of taxes on key infrastructure, encouragement of indigenous research and development, and corporatisation of agriculture to promote India as global headquarters of business enterprises.
''There is a need to implement GST at the earliest, so that the cascading effect of taxes is removed form indigenous manufacturing and services cost, transaction cost is reduced and trade and industry grow faster by taking advantage of the economy of scale and an efficient supply chain,'' said Revenue Secretary P V Bhide.
He further suggested that Central Sales Tax (CST) rate should be reduced from three per cent to two per cent as a step towards creating India as a common market. Excise and service tax should be integrated into central GST during 2008-09 and sugar and textiles should be brought from special duty regime to VAT regime.
The chamber recommended the creation of Agriculture Economic Zones on the line of SEZ to achieve growth in the sector by at least four per cent on a sustained basis.
For this purpose, the government needs to ensure adequate investments in areas like pre and post-harvest management, food processing, export promotion-related activities, specific crop related activities and application of the R&D to the agricultural production.
For adequate quality produce, investment in irrigation, transport, rural electrification and telecom connectivity needs to be done. This will help develop rural infrastructure as well as provide employment in the agriculture sector.
''The service tax and excise duty on inputs during the investment phase should be exempted from tax or refunded. Tax may be collected once the projects are put to use and start earning revenue,'' said the Chamber President Venugopal N Dhoot.
India should promote itself as headquarters of the business enterprises and retain long-term capital in the country by exempting dividend remitted by foreign subsidiaries or associates with 40 per cent or more investment. Alternatively, the tax paid on profit from which dividend is declared should be given credit.
Assocham has also proposed a favourable tax treatment under direct and indirect taxes for a strong research base and pool of intellectual properties, should be given to emerging sectors like bio-technology, nanotechnology, industrial deigns, IT, telecom, food processing, medicines, engineering etc and the double taxation of intellectual properties under service tax and VAT regime should be discontinued.