BCIC urges govt to simplify tax procedures

The Bangalore Chamber of Industry and Commerce (BCIC) has urged the government to turn its attention to some critical issues in the coming Budget, including the fringe benefit tax, value added tax, R&D, service tax and education and IT, with urgency.

Anant R Koppar, president, BCIC said that FBT should be either abolished or extensively simplified.

"An alternative could be to increase the corporate tax rate by a suitable percentage and do away with the FBT altogether. The introduction of FBT has complicated the tax structure further and has increased the administrative work of the department and assessees," he noted.

Moreover, as the tax is on a presumptive basis it is also being levied on genuine business expenditure by which the employees do not enjoy any collective benefits.

Thus the purpose of the levy on benefits collectively enjoyed by employees is being defeated, he noted. He added that BPO should get parity with IT sector on FBT.

On VAT, Koppar said that the non-availability of 'Form C', the need to file numerous documents, problems regarding the refund of input tax credit in excess of output tax, maintenance of books of accounts and their reconciliation, problems regarding the TDS mechanism under VAT are the key areas of concern.

"To obviate this, the government may consider the possibility of permitting manufacturers/dealers the usage of self-generated, pre-numbered forms. To start with, the facility may be given to manufacturer/dealers having a turnover above a certain limit and after watching the situation, the limit may be brought down," he added.

This has become all the more necessary in view of the recent amendment requiring these forms to be issued quarter-wise/month wise.

To boost R&D activity in various sectors, Koppar has suggested that the time limit for approval of companies by the prescribed authority be extended by another 10 years.

Further, the provisions in the rules restricting companies to be "exclusively" engaged in R&D activity need to be relaxed.

On the issue of service tax, he stressed that investment in infrastructure projects has always been slow and painstaking. The levy of service tax on such projects at such high rates will further dampen the development of the infrastructure in the country.