and Industry, Coimbatore
Press Release
February 26, 2010: Union Budget 2010
The Indian Chamber of Commerce and Industry, Coimbatore wholeheartedly welcomes the announcements made by the Hon’ble Union Finance Minister Shri Pranab Mukherjee in the Union Budget 2010. We welcome the following features.
a) Announcement on the Implementation of GST (Goods and Services Tax) and Direct Tax Code (DTC) with effect from 1st April 2011.
b) Extension of 2% interest subvention for exports by the SME sector by another one year.
c) Middle income group will be benefitted by the relief provided in Income Tax slabs for individual tax payers
for income up to 1.6 lakhs - Nil
above 1.6 lakhs and upto 5 lakhs - 10%
above 5 lakhs and upto 8 lakhs - 20%
above 8 lakhs - 30%
However our Chamber’s request that the age limit for senior citizens should be reduced to 60 has not been considered.
d) We also welcome the reduction of surcharge from 10% to 7.5% on domestic Companies.
e) Increase in the limit of presumptive tax from Rs.40 lakhs to Rs.60 lakhs will encourage the small businesses.
f) No increase in Service Tax is also a welcome measure. However it is to be seen which sectors are to be newly brought under the service tax net.
g) Boost to Power Sector: 75% of power produced is coal based and there has always been a dispute on the pricing of coal. Govt has addressed this issue by setting up a Coal Regulatory Authority. Govt’s increased allocation of Rs.1000Cr for solar power and the intention to set up 20000MW of Solar power is welcome.
h) We welcome the one time grant of Rs 200 crores for installing of Common Effluent Treatment (CETs) plant for Tirupur.
i) Under section 44AB the tax audit limit has been enhanced to Rs. 60 lakhs for businesses and Rs. 15 lakhs for professions. Our Chamber had represented that this should be hiked to Rs.100Lakhs.
j) We welcome the 1% interest subsidy for urban housing upto Rs.20Lakhs.
k) Extension of Health insurance scheme for NREGA beneficiaries is a welcome measure
l) Though we had requested that the stimulus package should be extended by one more year the rate of Central Excise Duties has been restored partially in few slabs from 8% to 10% and 20% to 22%.This could have been maintained at the reduced rates till the Govt was sure of full economic recovery.
Chamber is also disappointed on the increase in Minimum Alternate Tax (MAT) from 15% to 18% and also for enhancement of Excise Duty Rs. 1/- per Ltr on petroleum and diesel, customs duty of 5% on Crude oil which will result in the prices of petroleum products going up by around Rs.2.75 per litre.
We also welcome other measures like the announcement that the industry can avail CENVAT credit on Capital Goods purchases in a single instalment, and the provision for Small Scale units to remit Excise Duty on a quarterly basis. Though the SME sector contributes to 8% of the GDP, 40% of total exports, and provides 60 million jobs, the allocation for the SME sector is meager at Rs.2400Crores, and there is no announcement on a Technology Upgradation Scheme for the SME sector, so that this vital sector can modernize to face the onslaught of foreign competition.
Though the Govt has taken some steps to address the issue of labour shortage by announcing initiatives on skill development, the skill gap study shows that much more needs to be done to take this forward, and the future of industrialization of our country particularly the rural segment will depend on this.
The allocation of 173 lac crores for infrastructure development which is just 13% more than the last fiscal is grossly inadequate. This increase will be sufficient only to the extent of the inflation and the Finance Minister should have allocated a far higher sum considering the size of our country and requirement.
The Govt. programme to borrow Rs.3.45 Lac crores will result in further hardening of interest rates. The Govt should take necessary steps to avoid this.
Mahendra Ramdas
President