The issue of raising the professional tax, currently capped at Rs2,500 per annum, will come up for discussion at the meeting of the Empowered committee of state Finance Ministers on Goods and Services Tax to be held in Bhopal on Monday
New Delhi: Chartered accountants, lawyers and other professionals may have to shell out more money as state governments are contemplating raising the incidence of professional tax, reports PTI.
The issue of raising the professional tax, currently capped at Rs2,500 per annum, will come up for discussion at the meeting of the Empowered committee of state Finance Ministers on Goods and Services Tax (GST) to be held in Bhopal on Monday.
“As per the current provisions, states have the power to revisit the maximum limit of Rs2,500 payable as professional tax...we will obviously look at increasing it, and take the states’ views on the issue,” Bihar deputy chief minister Sushil Kumar Modi, who heads the panel on GST, told PTI.
Besides, he added, “We will also discuss the concept paper prepared by the (Union) finance ministry on negative list of services.”
Professional tax, according to KPMG executive director Pratik Jain, “is a state-level duty payable by employers (both public and private), who deduct it from the salaries of employees on a monthly basis.”
Mr Jain said that although the professional tax does not have significant financial implications, “companies want to avoid monthly compliance as it is cumbersome and would like to see it merged in GST.”
The Empowered Committee meeting, according to sources, will also deliberate on the issue of CST (Central Sales Tax) compensation.
Several states have expressed their unhappiness over delay in release of funds by the Centre to compensate them for revenue losses due to phased withdrawal of CST.
The Centre has released only Rs900 crore to states as CST compensation as against the provision of Rs 12,000 crore in the budget for 2011-12.
CST, a tax on inter-state movement of goods, was reduced from 4% to 3% in 2007-08, and further to 2% in 2008-09, after the introduction of Value Added Tax (VAT).
There will be a presentation on the best I-T practices in states like Maharashtra, Kerala and Madhya Pradesh as a robust infrastructure is required for GST, Mr Modi said.
The progress with regard to the Constitution Amendment Bill relating to GST, currently pending with the Standing Committee on Finance, will also be reviewed by the Empowered Committee, Mr Modi added.
The finance ministry had given its nod to the DIPP’s proposal for allowing 26% foreign direct investment (FDI) by foreign airlines in domestic carriers, but with the rider that such investments should not violate SEBI’s takeover code
New Delhi: In a move to help cash-starved airlines like Kingfisher, the industry ministry is pitching for exemption of the sector from the Securities and Exchange Board of India’s (SEBI) takeover code, which would come in the way of foreign carriers picking up a 26% stake in domestic companies, reports PTI.
The finance ministry had in the first week of December given its nod to the proposal of the Department of Industrial Policy and Promotion (DIPP) for allowing 26% foreign direct investment (FDI) by foreign airlines in domestic carriers.
However, the finance ministry’s consent came with the rider that such investments should not violate SEBI’s takeover code, under which an open offer is triggered once an investor acquires a 26% stake in a listed company.
However, such a situation would lead to a Catch-22 situation, as the open offer trigger would take the FDI in the domestic carrier to 51%, breaching the proposed cap of 26%.
In a letter to the Department of Economic Affairs (DEA), the DIPP has requested “a general exemption from SEBI regulations so that the same are not in conflict with the FDI policy”.
The sources said the DEA would seek an expert opinion on the issue from its capital markets division.
Most of the domestic airlines, including Kingfisher, Spice and Jet Airways, are listed companies and are in dire straits with respect to the state of their finances.
As per the present policy, up to 49% FDI is allowed in domestic carriers, but foreign airlines have been kept out of the option.
The policy tweaking may help the domestic industry get foreign investment.
“The monsoon has been good for the last two years. We have agricultural growth of 3%-4.5%, which ensures we will get to at least 7%. If policy paralysis continues and agriculture growth does not happen, we could slip below 7%,” industry leader Deepak Parekh said
New Delhi: India risks its economic growth rate slipping below 7% and its companies preferring overseas markets for business unless concerns about a policy paralysis are addressed and reforms are fast-tracked, reports PTI quoting industry leader Deepak Parekh.
Hoping that the economic scenario would improve in the New Year, the eminent banker said he was hopeful that 2011 would be forgotten as a bad year and the government would press ahead with its reforms agenda.
“If policy paralysis continues and agriculture growth does not happen, we could slip below 7” Mr Parekh said in an interview with Karan Thapar on the ‘Devil's Advocate’ programme of CNN-IBN news channel.
When asked whether Indian industrialists would stay away from investing in India and would look at overseas opportunities if the policy paralysis continues, Mr Parekh said: “Well, that trend can accelerate.”
“More and more Indians are investing abroad but the market is in India. Everyone knows that the desire for Indian businessmen is to first to invest in India. It is a huge market, large population, large middle class, urbanisation happening. All factors are positive. Only if we can get our act together,” he noted.
Mr Parekh is a member of the Prime Minister’s Council on Trade and Industry and was also part of a group of industry leaders and other eminent citizens that had written two open letters about the current state of affairs of the Indian economy and the need to address the concerns of a policy paralysis.
These issues, along with the various efforts required to be made to spur investments, were also discussed at a meeting this council had with the prime minister last month.
Asked whether India can achieve 8% growth without addressing the issue of policy paralysis and areas of concern with regard to the reform process, Mr Parekh said: “I do not think we will get 8%. We will have to be satisfied with 7%.”
“The monsoon has been good for the last two years. We have agricultural growth of 3%-4.5%, which ensures we will get to at least 7%. If policy paralysis continues and agriculture growth does not happen, we could slip below 7%.”
He, however, said there is a need to hope for the best.
“We have to look at it differently today. We have to be positive. It is a new year. Let us put the past behind us, let us look what we can do and how we can get back to 8% GDP (gross domestic product) growth,” he said.
“The more you criticise the government and the more negative you are about the government, the confidence around you, the confidence of the people of the country, also takes a dip,” Mr Parekh noted.
Mr Parekh expressed confidence the prime minister would live up to expectations.
“I am confident he will. You will see a different set of guidelines and difference in speed at which decisions are taken after February... I am very optimistic that the PM and his team have taken a view, have taken a decision, to not let 2011 continue,” Mr Parekh added.
When asked whether a loss of confidence was the reason for corporates not investing in India, Mr Parekh said: “I do not know if they have lost confidence, but the risk of investments, the approvals, takes a lot of time, it is always risky.”
“They may put large amount of money in a project if it does not take off, then they will be blamed why did you spend so much of money? The risk and the negative accusations...” he said.
Asked about his wish-list from the government to change the mood, Mr Parekh said steps are required to spur investment.
“Secondly, interest rates have to come down gradually.
Food inflation has come down extremely low, interest rates have to come down to spur growth... Thirdly, the approval process has to be streamlined.
“Fourth, there are dozens of projects (that) are struck half-way, particularly in the power sector. These power projects have to be kick-started again,” he said.
Mr Parekh said that pending reforms in areas like taxes, pension, banking and insurance were very critical, especially for the next generation.
“The other thing is, the government must reduce its expenditure. (Then), we must push social projects as 60% of our population, 6,000 million or so live in rural India. How do we make them put more money in their pockets, so that they do more consumption,” he noted.
Asked whether there was a problem of a conflict of interest between the government and the corporate sector, Mr Parekh said: “If you ask me, in the year 2011, the government and the industrialists, instead of coming closer, have become furthered. That trust, that closeness, that association, that one must have to succeed in a country is diminished.”
He said it is the responsibility of both parties to reach out to each other, but also criticised the trend of industrialists approaching the government for help when a particular industry is not working well.
Asked whether the business confidence was lower than even 2008 levels, he replied in the affirmative.
“... Fresh investments are not happening. We need massive investments in India, both from the public sector as well as the private sector, and neither are investing,” he said.
Talking about the widespread concerns of a governance deficit, Mr Parekh said: “When we talk of governance deficit. We are talking at two levels. One is petty corruption, which you and I and everyone in India faces, and one is the corruption at the senior level, like the Commonwealth Games, telecom scam...”
“The common man in India is corrupt because he cannot get anything done without paying a bribe... I myself had to pay for a death certificate. We need some redressal mechanism for this problem. We need police reform, judicial reform,” he said.