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FICCI Calls For All Services To Be Brought Into Tax Net

by Lorys Charalambous, Tax-News.com, Cyprus

14 December 2004


The Federation of Indian Chambers of Commerce and Industry (FICCI) is urging the government to bring all services within the tax net and reduce excise duties as part of the 2005 budget.

In its pre-Budget submission, FICCI advised the government to undertake a detailed study before any further reductions are made to peak Customs rates, warning that this could make imported goods cheaper than those produced in India.

The business group is also calling on the government to make urgent cuts in commodity taxes in order to give the country’s manufacturing sector a much-needed shot in the arm, noting that the combined effect of excise and customs duties, sales tax and local levies has produced an effective 35% consumption tax rate.

Specifically, FICCI is arguing for the withdrawal of the National Calamity Contingent Duty of Customs, alongside the abolition of the levy on crude petroleum oil.

Additionally, the Chambers call for an end to the 2% education excess on customs and excise duty, which it noted "amounts to more than two per cent of the customs duty due to the cascading effect and computation of effective customs duty".

FICCI welcomed measures in the last budget which integrated the goods and services tax, and argued that the “time is ripe” to bring all services within the tax net, suggesting that tax exemptions should be confined to essential public utilities.


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