Budget 2022: Industry Demands GST Relaxation and Simplification in Tax Slabs
Industry Experts Mukul Bagla, Chair, Direct Tax Committee, PHD Chamber and Mr. Bimal Jain, Chair, Indirect tax committee, PHDCCI decode what is expected at the TAX and GST front in Budget 2022-2023.
Budget 2022-2023 Tax and GST: The Union Budget is being presented at very vital period when the Indian economy is recovering from the impact of last two waves of Coronavirus and simultaneously fighting the third wave with caution. AT this juncture, the theme of the budget must be to refuel consumption demand to have a multiplier effect on production possibilities, private investments and employment creation. We expect that the budget will focus on reforms for various key sectors of economy thereby providing a boost to overall economic growth trajectory sooner than later. Industry Experts Mukul Bagla, Chair, Direct Tax Committee, PHD Chamber and Mr. Bimal Jain, Chair, Indirect tax committee, PHDCCI decode what is expected at the TAX and GST front in Budget 2022-2023.
On taxation front, we appreciate the reduction in the corporate tax from peak rate of more than 30% to effective rate of around 25%. However, as vast majority of MSMEs are either sole proprietorship or partnerships, therefore, the taxes should come down on these types of businesses, going forward. For such businesses, it is suggested that the maximum tax slab be brought down to 25 per cent. Also, for the new units, the effective rate is around 17 per cent, so we suggest to enable the entities to take benefit of Section 115BAB the time limit allowed to start manufacturing by a new unit may be extended by at least a period of 24 months i.e the new unit shall be allowed to start manufacturing by 31st March, 2025.
We expect the Budget to include effective measured to increase the tax base in the country as we have to encourage people to pay the taxes with lucrative tax paying benefits. On of such schemes could be providing a threshold of pension (after their retirement above the age of 60 years) for those who pay taxes continuously and honestly.
The rationalization of the tax slabs is very important as it would create tremendous demand in the economy, subside the inflationary pressures and enhance the sentiments of producers for production and create employment opportunities for the growing workforce in the country. The GST rates should be rationalized into three major slabs of 5 per cent, 10 per cent and 15 per cent along with a few sin goods in the slab of 28 per cent.
We greatly appreciate the various exemptions given by the government from time to time for the various social causes undertaken by making certain goods duty free. The country is now better prepared and equipped to deal with any emergency that may arise due to the looming threat of third wave of Covid-19 or any other viruses. However, it is essential to grant exemption once again to of all kinds of materials/medical equipments required to deal with the pandemic imported by NGOs/Trusts/Welfare Organisations should be considered at 5% rate of GST till 31st December 2022 so that the threat of looming third wave is adequately addressed.
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