Removal of import duties on Cold Rolled Grain Oriented (CRGO) electrical steel and integration of EDI (electronic data interface) system of Customs Department with that of the Excise in order to do away with duplication in documentation, are the important suggestions that the Indian Electrical & Electronics Manufacturers´ Association (IEEMA) has sought in its pre-budget 2017-18 submitted to the Ministry of Finance.
IEEMA sought removal of the present basic customs duty on CRGO Steel of 5 per cent fully, till indigenous production is made available in the forthcoming budget, while buttressing the point that the country needs to plan domestic CRGO availability strategically.
CRGO electrical steel is a critical raw material for manufacturing of transformers and is fully imported as it is not manufactured in India. Currently, CRGO consumption in India is about 2.5 lakh MT/ annum. Consumption is estimated as 11.5 Lakh MT for entire 12th Plan period (2012-2017) and 13.5 Lacs MT for entire 13th Plan period (2017- 2022).
Citing procedural delays in benefit/ rebate claim filings by exporters and manufacturers at times, IEEMA suggested integration of EDIs of both customs and excise departments so that the submission of various physical documents from time to time could be avoided.
The integration can facilitate verification documents by each of these departments from the EDI of the other, thus improving the ease of doing business. ´This will considerably reduce the transaction cost and shall give competitive edge to the exporters in the global markets,´ IEEMA claimed.
IEEMA proposed that the Minimum Alternate Tax (MAT) rate should be restricted to 50 per cent of the normal tax rate, stating that the ratio of MAT which is considered as MAT is too high as compared to normal tax rate. ´There is a genuine need to lower the rate so to justify the same to be a MAT,´ it argued.
At present, the Corporate Tax rate for Indian Companies is 34.61 per cent, while MAT rate for Indian Companies is 21.34 per cent.
Government should allow a special exemption or deduction for the organizations working under difficult conditions and adverse political environments in Jammu & Kashmir and North Eastern States in order to encourage them to undertake projects in such regions, IEEMA suggested.
Seeking avoidance of double taxation on works contracts in the power sector, IEEMA proposed such double taxation has to be removed by amending definition of transaction value. These situations arise in case of Input Credit on Composition Dealer under works contract and Free Supplies in Works Contract. IEEMA suggested that the mandatory Fixed Pre Deposit under Section 35F of Central Excise Act, 1944 amended to fix mandatory pre-deposit of 7.5 per cent of duty demanded or penalty imposed or both for filing appeal before the Commissioner (Appeal) and another 10 per cent of same for filing appeal before the Tribunal, be done away with. ´A hefty amount of 17.5% is blocked for years, even if assessee holds a case of merit,´ IEEMA added.
The Electricals industry body has sought inclusion of electricity in the purview of GST regime citing that otherwise, the credit of GST paid by the electricity and power transmission and distribution companies to the EPC contractors would not be available and hence such credit would be an additional cost to the company.
Under GST, payment of tax on advance amount should be eliminated in line with ease of doing business. Alternately, a suitable provision should be made incorporating the solution of above issues, the electrical industry body said.
IEEMA has sought clarification on multiple tax rate items involved in works contract. Normally, in a works contract various materials are involved, which are taxable at different rates. If some material is taxable at 5 per cent and others at 18 per cent or at 28 per cent then at what rate work contract will be taxable, is the issue in question. Now works contract is taxable at a single rate or taxable slab-wise rates.
- BS Srinivasalu Reddy