Presentation on theme: "CHAMBER OF SMALL INDUSTRY ASSOCIATIONS PRE-BUDGET SUGGESTIONS 2016-17."— Presentation transcript:
CHAMBER OF SMALL INDUSTRY ASSOCIATIONS PRE-BUDGET SUGGESTIONS 2016-17
To unite & offer a common platform to MSME Associations all over the country. To understand, research, represent and resolve major issues confronting MSME’s at State & Central Level. To be a major Information, Skill & Training Staff resource for MSME Associations leaving them free to network for Business Growth, resolve local issues and concentrate on Training & Skill Development. To create a solution-based partnership with all Government and Semi-Government Institutions dealing with MSME’s. WHAT COSIA DOES
Broad Principles for the Ease of Business Equal opportunities. No sops, No exemptions, No subsidies to the extent possible. Elimination of red tape and delay. Simplicity, Transparency and Clarity to eliminate the need for interpretation. Ensure compliance and financial discipline.
Enough of pats on the back… Over 55 million MSME enterprises. MSME’s Employs over 100 million people. MSME’s Contributes 8 % to GDP. MSME’s Contributes 40 % to Exports. MSME’s Contributes 45 % to India’s Manufacturing Output.
What we actually want: Good Infrastructure Power, Water, Roads, Streetlights, Gutters, Drainage, Transport Connectivity. Provision of ready infrastructure at the outset is crucial for MSME’s and must become a core criteria for providing Central Finance in any form to State Industrial Development Corporations.
Finance at rates which will work with us Lower Rates for MSME’s: Paradoxically, lending institutions charge MSME’s the highest rates and large institutions get away with the lowest. Apart from SIDBI and IDBI, other public sector financial institutions should also be given a mandate to lend to MSME’s at lower rates than current PLR (for CAPEX expenses). What we actually need
Create a Financial Revolution - Enforce 45 days credit If the 45 day Credit period under MSME Act is effectively enforced, it will be a greater Game Changer, than even the GST. High cost of working capital and subsidising large industries with extended and undisciplined credit is the biggest killer of MSME's The requirement of making payment within 45 days in Chapter V of the MSME Act is currently toothless and impracticable.
Give teeth to the MSME Act: Disallow set-off of Central Excise / Service Tax / GST There should be automatic disallowance of Excise Duty / Service Tax / GST availed as set- off, if payment is not made within 45 days of the date of Invoice cum Delivery Challan. Additionally, in the Report of the Directors, CFO’s & Auditors etc., mandate a detailed report regarding such disallowance and the details of the amounts so reversed.
Enforcing Payment within 45 days will: Revolutionize business in India. Enforce all round unprecedented efficiency. Reduce credit requirement and cost. And bring about Transparency.
Goods and Service Tax The Industry is confident that the GST shall be implemented by 01.04.2016. In that event, the principles cited by us and the procedural and other changes suggested in Central Excise, Service Tax and Customs etc may be applied pari passu (as applicable) to GST provisions and procedures.
Central Excise : Ease of doing business In the era of computerized Invoices, we need to do away with the requirement of preprinted, pre-numbered and pre- authenticated Invoices. Similarly the requirement of Original/ Duplicate & Transporter’s Copy is an outdated concept and needs to be scrapped.
Even though ARE-1 and other such documents are to be filed online, the Department asks for hard copies which are no longer necessary. This requirement should be deleted. In the case of sealing by Exporter [No Drawback] there is a time limit of 48 hours for getting ARE-1 signed which is difficult [weekends etc.,] & leads to corruption. Extend the time to 7 working days. Central Excise : Ease of doing business
Central Excise: LUT / ARE-1 & Annual Capacity Statement – Out?! Abolish requirement of Letter of Undertaking for Exporters. It is possible to argue that the requirement of ARE-1 should be scrapped as the Invoice, Packing List, Bill of Lading & Material Receipt are already with the Customs Department. Again at the end of the month all the details are given in the ER 1. Accordingly at the very least scanned copies should be permitted. The Annual Capacity Statement should be applicable only to those who are taxed on their installed capacity. MSME’s should be exempted from filing this Statement. In fact, in Digital India everything should be Online.
Central Excise: Believe in US and your coffers shall be full! Cenvat Credit is allowed against the purchase of materials. At times it is disallowed for want of proof of duplicate and original gate pass which should be amended. MSME’s should not be held responsible to validate proof of original purchase. In case of re-export, Bank Guarantee is not returned immediately. A provision needs to be made that BG will be returned within a maximum of 7 working days of submitting proof of re-export automatically.
Central Excise: In SEZ also buyer should issue CT 1 For supply of goods without payment of Excise Duty, the Buyer needs to issue CT 1 or CT3 to the supplier. Since the Buyer is the beneficiary it is logical that the onus of observing proper procedures is upon him. But this is reversed in the case of the Buyer, if he is from SEZ. Then the Seller is made to issue Letter of Undertaking though he has no control once goods leave his factory. Suitable amendment needs to be made to ensure that in the case of the SEZ, the Buyer should be made to issue CT1 or CT3 for procurement of goods without payment of duty.
Central Excise: Upgrade ACES, don’t downgrade Assessees! Assessees have upgraded their system to Windows 8.1 & now Windows 10. After installing Windows 8.1, they are trying to generate Central Excise Returns but the.xml file cannot be generated because of old software of ACES. Surprisingly, ACES are suggesting to the Assessees to try Windows 7 OS and proceed further. Hence it is necessary to upgrade the ACES system immediately.
Tax Compliance: Ease of business for MSME’s Different tax & Commercial laws make compliances mandatory by particular dates. For instance Excise & Service Tax to be paid by 5 th, TDS by 7 th, Sales Tax on 21 st, ESI, PF etc. And heavy penalties are provided for non compliance. This does not take into account the convenience of business where salaries & wages are the single biggest pre-occupation in the 1 st week or so. And that most enterprises are 10 or less people. It would greatly help if uniform tax compliance period is within 25 days after end of such Tax period.
Appeal / Order completion in 90 days At the Department level all Appeals must be sorted out in 90 days maximum with a view to preventing further costly and delayed legal processes. Transparent and speedy justice at this level will strongly improve likelihood of settlement of revenue disputes and payment.
One Assesse - One Registration. All services used in Manufacturing must be allowed set-off. Set-off must be permitted for Civil Construction done for installation of Plant & Machinery in the same year. The onus of service tax payment should be on the original service provider for all categories of services (Transports, legal fees, car hire charges, etc.). Hence there should be no reverse or joint (partial) charges. Service Tax: Ease of doing business
Credit of Service Tax is permitted if Commission is paid to the Agent in India. It is, however, disallowed if it is paid to a Foreign Agent. This is an anomaly which needs to be rectified. Service Tax set-off must be permitted even in the case of payment of Commission to a Foreign Agent. Service Tax: Anomaly
C form issue: Defaulter pays principle. On Inter-State Sale of Goods the concessional tax is 2% (against normal tax of 12.5%) provided the Buyer provides C Form. Though the benefit of the concessional tax of 2% goes to the the Buyer, in case he fails to submit the C Form the difference of 10.5% Tax is levied on the Seller. This can be set right if the Buyer is made to pay the difference of 10.5%.
Withdraw Dividend Distribution Tax It is not a Tax on Income but Tax on the form of Organization. It applies only to Companies and not to Partnership Firms. It is hence grossly unfair and must be withdrawn.
Income tax: Current PPF exemption is Rs. 1 lac per year. Allow PPF exemption up to Rs. 3 lacs per year. Increase in the PPF exemption will give long term resources to the Government for infrastructure Development. This in turn will help in growth of the economy. Savings based economy: Win win situation
Currently, there are tax havens in guise of development of backward areas. Several of the bigger units which have enjoyed this benefit, have shifted out once the tax holiday period is over. Tax havens, therefore, should not be created. Instead, a 5 year deferred payment of statutory taxes (Indirect and Direct) could be given to units strictly for setting up factories in such backward areas prior to discharging their statutory tax compliances. No Tax Havens
No sops for IT/ITES Units Make in India pre-supposes primacy for manufacturing. However, there is a rain of sops for IT/ITES, like Amazon & Flipkart ranging from relaxation in FSI to IT tax breaks. Many of these companies are not even breaking even and give no revenue. Brick and mortar manufacturers provide good tax revenue and seek no sops. There should be equal opportunity for all.
Ease of doing business: One India – One Market The need based / standard and sinful classifications should be simple and transparent to avoid need for any interpretation. The rates needs to be kept stable for a period of 5 years providing room for downward revision on better compliance.
Ease of doing business: Do away with Transit Permits, Levies etc. The GST Act is awaited with bated breath by industry to create a one-India market. To ensure uniformity and free inter-State trade do away with Road Permits, Toll Taxes etc. No such permits to be introduced in GST.
Public Sector Units: Purchase from MSME’s Public Sector Units must mandatorily purchase at least 30% of their requirement from Micro and Small Scale Manufacturers. With emphasis on Make in India & Made in India, there must be no room for those who just import & sell.
STOP CHARGING LIQUIDATED DAMAGES ON TAXES Public Sector Units and Industry are charging Liquidated Damages on the Basic Amount + taxes by claiming that they are charging on cost. (NOF: Net Outflow) This is unacceptable…there should be a clear direction to PSU’s and Industry that they can charge LD only on the basic amount.
Land Bank…for MSME’s on Installment / Lease / Rental The high cost of land is a major hurdle for setting up a new industry. It promotes very unhealthy speculation and land grabbing, in the name of promoting industrial development. Land must be made available through instalment payments on ownership / lease. If on rental basis, there must be assurance of periodical renewals with reasonable prefixed, predetermined increase in rental, strictly for continued use for industrial purpose but without any ownership rights.
Incentivize Innovation.. Government has declared 2010-2020 to be the Decade of Innovation. To encourage this Government could devise a Scheme by which products manufactured and sold by an MSME as per the Patent registered in its name, be given the benefit of deferred payment of Excise Duty for at least 3 years.
ENTREPRENEURSHIP IS LIVING A FEW YEARS OF LIFE LIKE MOST PEOPLE WON’T SO THAT THEY CAN SPEND THE REST OF THEIR LIFE LIKE MOST PEOPLE CAN’T.
SKILL INDIA MAKE IN INDIA MADE IN INDIA DIGITAL INDIA KEEP IT SIMPLE…MAKE IT HAPPEN
Thank you Presented By: Mr. Sanjay Mehta Mr. R. Seshan Mr. Sandeep Kundra
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