The Hindu Business Line
1. Sops to Power Sector
Given the severe power shortage in the country, the government should extend tax sops and incentives to augment power capacities in the country. In this connection UPA-II's self imposed 100-days agenda to add 5,653 MW capacity addition is most welcome but this is only a short term target. UPA-II should fulfill its earlier promise of "Power for all" by 2012. In order to plug the peaking deficiency of more than 12% government needs to accelerate capacity addition and this is possible through tax sops and incentives to power equipment manufactures/developers as well as bankers also who can lend more to this core sector if earlier tax incentive is restored to them.
Emphasis should be laid on encouragement to Small Hydro Projects with capacities of less than 25 MW in the form of low interest rates, say at the rate of 7%, fast clearance of projects by respective authorities and duty exemption for equipment manufacturers who supply components to small hydro projects. In addition to contributing to ecological balance, employment generation in remote rural and tribal areas can also be ensured.
2. Correct distortions in duty structures and simplify tax laws
Finance Minister should take up the task of simplifying the duty structure and remove all anomalies to avoid litigations. For example, there is a plethora of tax rates in the area of indirect taxation. To cite, in case of imported goods, duties like Basic Customs duty, Countervailing duty, Additional customs duty education cess and higher education cess are being levied. The duty calculation is most cumbersome and one needs to take the help of a consultant to arrive at correct rate of duty. It is suggested that instead of different duty rates, a single effective rate of duty can be levied and this helps in smooth transition to GST also. Also in case of CENVAT under Central Excise, certain intricacies are still there in taking input credit which need to be streamlined.
Further, in case of Direct taxes, the government should abolish FBT which is not contributing much to tax receipts except paper work to the government and to the assessees.
There was a talk about simplification of tax laws and to bring out Direct Taxes Code. UPA-II should come out with this new piece of legislation at the earliest.
KNVS Subrahmanyam
Chartered Accountant
GM (F&A)
GREENKO ENERGIES PVT LTD
HYDERABAD
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