Budget 2011: Retailers association of India has urged FM to include below mentioned financial incentives for retail sector in the upcoming Budget: 2011-12.
1) Service tax on renting of immovable property should be withdrawn.
2) In reverse charge mechanism service tax payment should be allowed by utilizing the
3) “SERVED FROM INDIA SCHEME” should be made available for Retailers. Although, as per para 3.6.4 of FTP, Retailers are eligible to get license from DGFT under “Served from India Scheme (SFIS)” the same is being denied to retailers. Such ambiguity in the policy document should be clarified & retailers generating foreign exchange inflows should be given the SFIS License.
Serve for Food India Scheme (SFIS)
The benefit of this scheme should be made available to retail players which at the moment is being denied. A suitable change to this extent would be needed in the EXIM Policy. Any sales using foreign currency / international credit cards must be counted against this and duty credit entitlements must be credited for retailers. This can be used for import of items.
4) VAT Refund for making India attractive for shopping tourism
With the new GST regime it would be easier to monitor the tax paid on various goods and commodities. This also provides an opportunity to encourage foreign tourists to come into the country and experience the new and modern retail scenario in India. In line with practices worldwide India should also introduce a system of GST refunds for foreigners purchasing items in the country and taking it abroad (GST refund). This would also complement the ‘Incredible India’ campaign that has been run very effectively by the government.
5) Customs Duty and other entry taxes
A reduction in the customs duties relating to consumer items would greatly channelise funds to boost the economy. For eg: cosmetics hitherto are considered luxury and it attracts very high customs duty. However, it is known that cosmetics help in retaining visible health of individuals and the use of the same should not become the privilege of a few. We request the Government to have a re-look at the custom duties levied. Also, States, municipalities charging Octroi to be directed to abolish the same.
6) Direct tax incentives
• In order to promote employment in the sector, tax incentives in the form of 100% deduction on expenditure incurred on employment of new workmen could be considered (similar to deduction available under Section 80JJAA of the Income-tax Act, 1961 to an industrial undertaking engaged in manufacture of articles or thing).
• A weighted deduction could be allowed for payment made by retailers towards training and development of their personnel in order to improve their skill sets for eg contribution made to technical universities, institutes etc.
• Business consolidation plays an important role in achieving operational efficiencies. Section 72A, containing provisions relating to carry forward and set-off of accumulated losses and unabsorbed depreciation, could be amended to allow corporate restructuring (mergers, demerger) benefits in the retail sector.
• Incentivize supply chain and logistics firms to further the growth of this sector.
– 100% tax holiday in respect of the profits of the undertaking involved in cold chain infrastructure for a period of at least 10 years.
– Granting infrastructure status to supply chain/ cold chain infrastructure
– Incentives for Investment in transportation infrastructure.
• Income tax depreciation rate on Furniture, Fixture and Building improvement etc should be increased to 25%.
7) Tax breaks for rural / remote area outreach initiatives
There are specific tax holidays/ phased deductions available to undertakings engaged in manufacturing, exports, service industry etc, the Government could consider introducing some direct and indirect tax benefits for the retailers, specifically those operating in rural areas/ areas requiring special economic attention.
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