The Associated Chambers of Commerce & Industry of India (Assocham) has asked the Modi government to do away with all kinds of surchage on corporation tax, service tax and similar levies to make tax calcuations easy.
"Eliminate all surcharges on corporation tax, service tax, etc. This does not promote ease of doing business, when everyone has to calculate taxes to two decimal places. Adjust tax rates where necessary," it said in its recommendations to the government at the pre-budget meeting held on 6 January, 2016.
Besides, it also wants a change in the system for paying service tax on government payments.
"Service tax should be paid by contractors to government, only when the receive the payment from the government (this could be deducted from the government's payment)," it said.
Union Minister for Finance Arun Jaitley met representatives of trade and industry as part of his interaction with various stakeholders in the run-up to the Union Budget, which is likely to be presented on 29 February.
Department of Economic Affairs secretary Shaktikanta Das, Revenue secretary Hasmukh Adhia, Department of Industrial Policy and Promotion (DIPP) secretary Amitabh Kant and Chief Economic Adviser (CEA) Arvind Subramanian were also present at the meeting.
The Narendra Modi government is facing both domestic and global headwinds this year, reflected in exports falling for the 12th straight month in November last year, besides a tepid growth in private capital expenditure, forcing the government to take the lead in driving growth.
Exports contribute to about 20% to India's GDP, which grew 7.4% in the second quarter, taking the half-yearly growth rate to 7.2% this fiscal.
In its mid-year economic review released last month, the NDA government revised its FY2016 growth rate projection to 7-7.5% from the earlier 8-8.5%.
The growth rate for the next fiscal, which will be guided by Budget 2016, will not change much unless the government fast-tracks economic reforms, said an economist.
"The FY16-17 outlook is unlikely to be any different if supply-side reforms remain on the slow lane," said Radhika Rao, economist, group research, DBS Bank, in her note.
"With private investment still on a slow-burner, higher public-sector participation will be needed to pick part of the slack," she added.
The government is taking the lead in increasing investments in infrastructure, by seeking participation of sovereign funds from Singapore, Russia, the UAE and other countries.
Budget halwa
The process of printing budget documents began with with the ritualistic halwa ceremony at North Block. This year, Jaitley will find it difficult to stir the economy in a big way, given that many sectors are seeing a slack in performance, especially in exports.
