In India, currently the tax rate for large corporations is 25%, while it is 33% for proprietorship firms and 42% for partnership firms. We expect the Budget to address this anomaly and usher in a level-playing field by offering them the lower corporate income tax rate of 25%.
India has over 1 crore active GST firms, although the number of limited and private limited companies in the country is just around 10 lakhs. In such a circumstance, 90% of enterprises should not be burdened with paying higher taxes. Through this upcoming Budget, we seek a reduction in GST across sectors, which will be a boon to the economy as well as the smaller businesses.
One area that the Budget could address and set right is eliminating the separation of CGST and SGST in bills and filings. Such a move will go a long way to simplify business processes.
It is preferable to align Advance Tax with the quarter-end rather than 15 days before the quarter-end. We request the government to pursue a similar approach when it comes to filing GST returns for businesses that don't have to use e-invoicing. This can be accomplished by eliminating the need to file monthly GST returns in favour of quarterly single-filing return. If implemented, this will prove to be a blessing for India Inc, as monthly filing is an unnecessary strain for businesses, especially MSMEs. More so, in this time of COVID-19 pandemic when businesses are making every effort to conserve financial resources.
We expect the government to limit Foreign Direct Investment (FDI) in tech and internet businesses to 75%, instead of 100% now, unless the company is a wholly-owned subsidiary of a foreign company. This will ensure at least 25% of the wealth is created in India and remains in Indian hands. We request the Government to address this issue through the upcoming Budget.
The government announced in the previous budget session that it would extend social security benefits to millions of contractual and casual workers across India, by creating ESI infra for underprivileged people which provides health insurance and other benefits. In order to complement this initiative, health insurance for workers should be included as ESI contribution, which is something we are looking forward to in this Budget as this would help private hospitals to complement the Government initiative.
Additionally, MSMEs should be accorded a separate banking policy targeted at easy credit access and disbursement. For a sector that operates on slim margins and long working capital cycles, access to low-cost credit and speedy disbursement of the same are vital. We request the Government to announce concrete steps to make this a reality.
Through the upcoming Budget, the government should give a push to speed up the execution of the Fund of Funds scheme, aimed at establishing technological advancements. This would be a great service to India Inc.
The author of this article is Mr. Dinesh Agarwal, Founder & CEO, IndiaMART InterMESH Limited
The views and opinions expressed are not of IIFL Securities, indiainfoline.com
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