The chamber sought the abolition of octroi, particularly on textile commodities, in Karnataka, Maharashtra and Madhya Pradesh to enable free movement of textile products from other States.

In a pre-budget memorandum addressed to the Union Finance Minister relating to direct and indirect taxes for 2010-11, the President of ICCI, Mr Mahendra Ramdas, said the MSEs have to regularly invest in modernisation to remain competitive in the global markets and hence, the depreciation allowed for plant and machinery should be increased to 30 per cent.

The Government should introduce, on the lines of TUF scheme for textile industry, a Technology Upgradation Fund for engineering SMEs.

There was “extraordinary delay” in getting the TUF subsidy by the textile industry.

Subsidy

Pointing out the capital intensive nature of the operation of effluent treatment plants, he suggested that an annual cash subsidy might be granted to them to meet the capital and recurring expenses, apart from sanctioning tax concession/incentives such as VAT, service tax, customs and excise duty relief.

The textile buying houses should be treated on a par with EOUs and SEZs in terms of tax treatment to give a boost to export of textile products, and the concession may be linked to the turnover generated, he suggested.

Mr Ramdas said in countries such as China foreign companies were permitted to hold cotton stocks at the ports and allowed to sell the stock in the local market.

If such a policy is followed in India, it would help the textile mills to buy cotton at competitive prices as it is free from duty.

He also urged the Centre not to give any incentives for export of cotton as it would only help the competing countries.

If incentives for cotton exports are given, the Government should extend similar concessions to (exports of) cotton yarn, cotton fabrics and cotton made-ups, the ICCI President said.

Octroi

He said the textile industry faced difficulties in meeting the norms of Export Promotion Capital Goods Scheme for additional export obligations along with annual average level of exports as capital goods imports were not only for capacity expansion but for modernisation and replacement of machinery. He pleaded for removal of maintenance of annual average for the preceding three years to enable the industry comply with the norms.

The ICCI President said octroi was levied on yarn in Karnataka, Mumbai and Indore on purchases made from other States that pushed up the cost and affected manufacturers of cotton yarn/fabric/garment in other states. He called for the abolition of octroi.

MAT reduction

Mr Ramdas pleaded for introducing a clause in the IT Act to make duty drawback, DEPB as income eligible for deduction under Sec 80IB of the act. The Minimum Alternative Tax on booked profit should be cut from 15 per cent to 10 per cent. The tax on dividend payment should be abolished and the proposal in the new Direct Taxes Code to levy a 2 per cent tax on gross assets should be given up as it would affect companies with long gestation periods.

The gratuity and pension payments should be tax free and should not be taxed on withdrawal, he added.

Source : The Hindu BusinessLine, India, dated 27/10/2009