Taking exception to the high interest rates charged by banks in lending to SMEs (small & medium enterprises), the Utkal Chamber of Commerce and Industry (UCCI), an apex body of SMEs in the state has pitched for reduction of interest rates in the ensuing Union Budget.
“The interest rates charged by banks on loans to the SMEs is extremely high in India as a result of which the units are rendered uncompetitive with their counterparts in other countries,” said Ramesh Mahapatra, President, UCCI.
He said, interest charged by banks should be brought down to 9-11 per cent depending on the credit rating of the particular SME.
The industry body has also asked the Union finance minister Pranab Mukherjee to enhance the excise exemption limit for the small scale sector considering the increase in costs of production in the last 10 years.
“The excise exemption limit granted 10 years back to the small scale sectors should be enhanced from the present level of Rs 1.5 crore to Rs 4.5 crore. The government should consider that the cost of production has escalated more than 200 per cent across the sectors over the last 10 years,” he added.
In addition, the industry body has underlined the need for reduction in the corporate tax for generating the higher revenue for the government.
“The corporate tax should be brought down to flat rate of 25 per cent which will increase compliance, thereby generating higher revenue for the government,” said Mahapatra.
As per the corporate tax rates for 2011-12, domestic companies, with total income of more than Rs 1 crore, need to pay a corporate tax of 32.44 per cent. This includes a basic rate of 30 per cent along with a surcharge of five per cent and an education cess of two per cent.
In case their aggregate income is less than Rs 1 crore, the domestic companies are required to pay corporate taxes at a rate of 30.9 per cent. This is inclusive of a direct tax of 30 per cent and an education cess of three per cent.
