Meeting Meeting with Revenue Secretary Revenue SecretaryTuesday, 6 October 2015Tuesday, 6 October 2015

INDIRECT TAXESINDIRECT TAXES

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ContentContent

A. Policy Direction in Current Economic Environment

B. Create Conducive Environment For Investment & Growth

C. Competitiveness of Indian IndustryD. Bridge Gap Between Tax Policy And

ImplementationE. Removal of Tax UncertaintyF. Reduction in Tax LitigationG. Service Tax Audit Need OverhaulingH. Promote “Make in India”I. Introduction of GST

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A. POLICY DIRECTION IN CURRENT A. POLICY DIRECTION IN CURRENT ECONOMIC ENVIRONMENTECONOMIC ENVIRONMENT

Create conducive environment for investment, and growth by removing tax uncertainty & making administration responsive

Improve competitiveness of Indian Industry and provide level playing field

Remove wide gape between tax policy and implementation

Moderate the service tax and excise duty rates to stimulate demand & bridge revenue gape by removing exemption

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B. CREATE CONDUCIVE ENVIRONMENT CREATE CONDUCIVE ENVIRONMENT FOR INVESTMENT & GROWTHFOR INVESTMENT & GROWTH

Remove double taxation under Service Tax and VAT for several sectors

Expeditious resolution tax uncertainly for emerging businesses like E-commerce and technological changes in others like financial, IT and telecom services. Minimize ambiguity

Remove exemption of basic customs duty on inputs and make it Cen-vatable

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C. COMPETITIVENESS OF INDIAN C. COMPETITIVENESS OF INDIAN INDUSTRYINDUSTRY

Restore full CENVAT credit for inputs/ input services as was permitted till March 2011

Eliminate CVD exemptions, instead allow CENVAT credit

Reduce CST rate to 1% which will reduce cascading of tax and will help in creating common market

Reduce tax cascading by excluding central & state taxes from assessable value for computing excise and service tax payable

Expedite settlement of refunds5

D. D. BRIDGE GAP BETWEEN TAX POLICY BRIDGE GAP BETWEEN TAX POLICY AND IMPLEMENTATIONAND IMPLEMENTATION

Provide non- adversarial tax administration which is not obsessed by meeting revenue targets.

Move towards real time tax certainty. Delete tax provision of raising demand after 5 years on interpretative disputes & restrict it only to cases of frauds.

Need for stability in tax system by not resorting to frequent changes through notifications and circulars

Interest rate up to 30% on delayed payment is exorbitant and need to be reduced to 12%

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E. REMOVAL OF TAX UNCERTAINTYE. REMOVAL OF TAX UNCERTAINTY Tax uncertainty is major impediment for investment

Demand for tax after 5 years which cannot be collected from customers, may threaten business viability

Tax disputes should be resolved expeditiously in fair manner.

Audit/ investigation by multiple agencies for same year & same issue to be avoided by legislative provision in Section14.

Service tax return to be modified covering all the information required by tax department;

Create directorate of tax payer services. Expeditious advance rulings

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F. REDUCTION IN TAX LITIGATIONF. REDUCTION IN TAX LITIGATION

Power to issue of Show Cause Notice & adjudication should not be with the same person to reduce bias. SCN should be adjudicated within 6 months

First appeal within the department does not serve any purpose for resolution of dispute when 99% of the orders are confirmed. Independent machinery should be established free from executive influence to impart justice;

Adjudication/ appellate orders should be issued within 30 days of personal hearing;

Lower authorities should follow orders of tribunals/ courts

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G. SERVICE TAX AUDIT NEED G. SERVICE TAX AUDIT NEED OVERHAULINGOVERHAULING

Audit is conducted in routine manner and auditee is not given any confirmation even if there is no discrepancy

Even after full audit, departmental officers from preventive wings or DGCEI again start enquiry for same period and mostly same issues and ask for same records which are audited;

Audit should be made comprehensive, audit report should be issued at the end and repeat audit/ investigation for same period should be discontinued.

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H. PROMOTE “MAKE IN INDIA” H. PROMOTE “MAKE IN INDIA” Inverted Customs duty structure to be corrected in

certain sectors. Duty structure under the free trade agreements

need review Recommended Basic Custom Duty rates (with few

exception):• Inputs / intermediates materials : 3 - 5%• Finished Products: 10%

Safeguard / anti dumping duties be levied carefully & not to create distortion

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I. INTRODUCTION OF GSTI. INTRODUCTION OF GST

Industry strongly support introduction of GST at the earliest to replace existing multiple tax structure which fragmented the market and let to tax cascading

Proposed 1% non-vatable tax should not be levied. It will have adverse impact on cost of indigenous goods by 4 to 6%

Credit for input taxes should be part of the legislation to ensure certainty and uniformity

Industry should be consulted in finalisation of Rules and procedures and given adequate time for transition.

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INTRODUCTION OF GST (Contd…..)INTRODUCTION OF GST (Contd…..)

“Place of Supply Rules” for certain sectors need consultation with respective sectors for smooth transition such as E-commerce, IT, Banking, telecom etc.

Definition of GST proposed in Article 366 needs amendment to ensure stability of GST. The word “any” to be deleted and the words “as per the framework approved by GST council” should be added.

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Thank You

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The Associated Chambers of Commerce and Industry of IndiaASSOCHAM Corporate Office:

5, Sardar Patel Marg, Chanakyapuri, New Delhi 110 021,  INDIATel : 011-46550555 (Hunting Line)  ●  Fax : 011- 23017008/9

E-mail: assocham@nic.com; finance@assocham.com    ·  Website: www.assocham.org