Corporate India sought lower tax and more incentives for investments while exporters called for quicker GST refunds at a meeting with Finance Minister Arun Jaitley on Wednesday in the run-up to the last full-year budget of the NDA government before 2019 general elections.
The finance minister exhorted India Inc to make investments in infrastructure sector to build a stronger India.
Private investment along with public and foreign investments are the key to boost growth and create job opportunities, he said in his opening remarks during his third pre-budget consultation meeting with business leaders and representatives of various industry chambers, the finance ministry said in a statement.
Highlighting the importance of investment in the infrastructure sector, Jaitley said the government has taken various steps and has also set-up National Investment and Infrastructure Fund (NIIF), among others, to boost investment in the sector.
Various suggestions were made by the business leaders, including permitting the purchase of banks' recapitalisation bonds by institutions and the public at large, allowing banks to securities their loans and sell the same, setting-up of Land Bank Corporation for monetisation of government land parcels, including those belonging to the Army and Railways.
The industry bodies suggested lowering the corporate tax to 18-25 per cent, from up to 30 per cent at present. The exporters, who are grappling with blockage of working capital, pressed for exemption from tax on export income or lower levies on forex earnings and faster clearance of GST refunds.
"The finance minister has promised 25 per cent corporate tax rate long back and we expect that the finance minister will fulfil his promise in this Budget," said Ficci President Pankaj Patel.
The industry body also sought support for innovation, employment generation through investment in the MSME and startup sector and specific incentives for new investments, highlighting the need to establish an export zone with manufacturing facilities but without any taxes or regulations.
"We have asked to reduce the corporate taxes. Across the world, people are reducing corporate taxes and India is among the highest. We do need to create more demand and capacities for private investment and if you see today, GST has increased the tax rates," CII President Shobana Kamineni said.
CII suggested that the road map for corporate tax rate for India should include reducing it to 18 per cent (all inclusive) at the earliest and withdrawal of surcharges and cesses.
"The implementation (of GST) and refund delays are a cause of concern, so we have suggested that if they can give us the IGST refund also, along with the drawback. In the US, there is a differential tax rate for export earnings, so we have sought a lower rate of tax on export earnings than the normal corporate rates," EEPC India Working Committee Member P K Shah said.
According to Shah, refunds of exporters to the tune of at least Rs 60,000-70,000 crore are stuck post GST roll out in July.
"We have asked the finance minister to take the corporate tax to 25 per cent comparing with developed and industrialised nations. This would help in investment and which, in turn, would increase employment opportunities. Dividend distribution tax, which is around 20 per cent, should also be lesser," said Assocham President Sandeep Jajodia.
"We would urge the government to provide fiscal support to units that provide additional employment in the export sector. Such a scheme will also help the workers move from informal employment to formal employment, which is a priority of the government.
"Incentives may be provided based on twin criteria of growth in exports and growth in workers so that while export is increased, the employment intensive units also get a boost," exporters' body FIEO said.
"We have requested for reduction in the direct taxes and a scheme to boost women employment and expediting the refunds under GST as they have been delayed," P R Aqueel Ahmed, Vice- Chairman of the Council for Leather Exports.