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ASSOCHAM Submits Indian Budget Recommendations

by Mary Swire,, Hong Kong

14 December 2012

Delegates from the Associated Chambers of Commerce and Industry of India (ASSOCHAM) have met with government officials to discuss specific tax proposals for inclusion in the nation's forthcoming budget for 2013.

In light of concerns that the Indian economy is slowing, ASSOCHAM urged the government to reverse recent increases to service tax rates, back to the 8% rate in place two years ago, from the current 12% rate. This could be offset by higher customs duty rates, ASSOCHAM suggested.

ASSOCHAM urged the adoption of a Goods and Services Tax, and requested to be involved in its development. In addition, the association recommended increasing the exemption threshold for personal income tax to INR300,000 (USD5,500), which it said would foster improved tax compliance rates, boost consumer consumption and savings.

The Chamber also asked the government to address the tax treatment of the synthetic fiber industry. Synthetic fibers attract an excise duty rate of 12%, up from 4% in 2008, while cotton fiber is exempt from excise duties.

To support the construction services industry, ASSOCHAM requested that the government introduce a concessionary 2% rate of service tax, to partially offset the revocation of the service tax credit, which was in place prior to April 1, 2011.

Furthermore, to encourage foreign direct investment in the nation's embattled aviation sector, the Chamber asked the government to exempt the domestic repairs, maintenance and overhaul services sector from service tax.

TAGS: tax | sales tax | India | fiscal policy | aviation | budget | goods and services tax (GST) | excise duty | tax rates | tax breaks | construction | individual income tax | services

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