A week ahead of the Union Budget, India Inc on Friday pitched for a 5% cut in the corporate tax in the Union Budget to be presented on July 5. It also demanded incentives to boost investments to rev up the economy.
"A 5% cut will bring down the corporate tax rate to 25% and revive investment," said Assocham president Balkrishan Goenka who was in the national capital to talk about the demands of the industry. Assocham, the Associated Chambers of Commerce and Industry, has over five lakh members from small and medium enterprises, and other businesses.
Pointing out that the industry is in need of a fiscal push in the Budget, Goenka, who is also the chairman of Welspun Group, said "The industry is at a standstill due to liquidity crisis. Rushing companies to National Company Law Tribunal (NCLT) because of liquidity shortage is not the solution."
He said the industry is facing acute liquidity shortage after the country's leading infrastructure company Infrastructure Leasing & Financial Services (IL&FS) defaulted on payments to lenders, triggering a series of defaults.
He stressed on an urgent need to boost liquidity into non-banking financial companies (NBFCs).
"There is no problem of liquidity at the banks' end, but they are not lending money to businesses. Earlier, they were lending to the NBFCs which were in turn lending to small and medium businesses. After the IL&FS episode, they too have stopped," said Niranjan Hiranandani, vice-president of Assocham and managing director of Hiranandani Group.
To boost investment, the Assocham also wants finance minister to consider allowing 100% depreciation in the first year of new investment.
To boost consumption demand and investment, the Assocham has suggested that personal income tax exemption should be raised to Rs 5 lakh, along with a cut in corporate tax.
Also, the threshold for the foreign direct investment (FDI) in some key sectors like defence and insurance should be revised upwards or eliminated.
Talking about the tourism sector, Goenka said, "There are more than 1,200 islands which need to be developed through a public-private partnership model. Also, visa on arrival facility should be extended to ensure hassle-free visit of foreign tourists."
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