Amendments to the Proposals in Finance Bill. Dated 22/3/11
Finance Minister has once again buckled under pressure and rolled backs several of his revenue increasing proposals.
Finance Minister Pranab Mukherjee rolled back the 5 per cent service tax on hospitals and diagnostic services proposed in the Budget.
The proposed 5 per cent tax on services provided by centrally airconditioned hospitals with 25 and more beds as well as diagnostic services was a step in the right direction.
Opposition by calling it a Misery Tax has done a disservice to public. The revenue generated by this Tax should have been used to augument free medical services in Government Hospital to general public.
Many of such AC hospital got free land with mandatory 25% free medical service to poor people. But hardly anyone is delivering.
Service Tax on AC hospital would have brought misery to only Medical Insurance Companies as substantial portion of AC Hospitals billing is reimbursed by them.
The benefits of the proposed Goods and Services Tax (GST) would be diluted if exemptions continued to be given like this. Thus It is a relief that the levy is being rolled back only until GST came into force,
The tax had evoked crocodile Tears & protests. At an industry chamber event after the Budget, noted cardiologist Naresh Trehan had earlier called the move a cruelty.
The reportors present at event should have questioned the renowned Docter that is it not a cruelty that no room in such hospital is leas that Rs 5000 per day. If some can pay Rs 5000 to him why additional levy of Rs 250 is a cruelty. Even one time parking at his hospital Medicity cost Rs 50/-.
Prathap C Reddy, founder chairman, Apollo Hospitals also praised the roll back. He said now we focus on serving the nation.
Mr Reddy such hospitals like yours are only serving the rich and the corrupt and making huge profit in the process. The levy on your hospitals should be equivalent to Five Star hospitals.
The finance minister also reduced the proposed Customs duty on CKD kits containing pre-assembled engine, gear box or transmission assembly to 30 per cent from 60 per cent proposed in the Budget.
The levy would have harmed luxury car makers. The government has taken the middle path and thus created one more taxation slab. This will increase prices of a few cars, mainly those whose engines come from outside India. All focus on benefiting the rich and super rich European Companies.
The finance minister also blunted the impact of 10 per cent excise duty on branded garments by increasing the abatement rate from 40 per cent to 55 per cent of the retail sale price. The finance minister said this would help small garment manufacturers.
Why so high adatement? Why readymade garment manufacturer need so much cushion from MRP.? Such high abetment indicate acceptance by government of high profiteering by this sector.
With this relief, a unit would continue to be eligible for the SSI (small scale industry) exemption in 2011-12 even if it had a turnover of Rs 8.9 crore based on retail sale prices in the current year.
The finance minister also lessened the impact of the move to bring 130 products into the excise duty net by allowing 35 per cent abatement (based on retail sale prices) on many of these items.
FINANCE BILL :- EXISTING PROPOSALS & AMENDDED PROPOSALS
Existing : Reduced tax rate from 30% to 15% on dividends received by Indian companies from foreign subsidiaries in which the Indian company holds more than 50% share capital
Amended Proposal: Lowering the holding requirement in the foreign company from 50% to 26%. The move has been welcomed by industry
Existing : Mandatory 10% levy on branded ready-made garments and made-ups of textiles with 40% abatement.
Amended Propsal :Increasing the abatement rate to 55% of the retail sale price so that the overall tax burden comes down
Existing: Levy of 1% excise duty on 130 goods *
Amended Propsal : Abatement of 35% on many of these items
Existing : Redefined completely knocked down (CKD) units to exclude pre-assembled engine, gearbox or transmission mechanism from the purview of concessional import duty Amended Propsal : Reducing basic Customs duty from 60% to 30% on CKD kits with pre-assembled engine, gear box or transmission assembly imported for manufacturing vehicles
One per cent “unconditional” excise duty and countervailing duty levied on mobile handsets. The Budget had proposed an increase in excise duty on mobile handsets from 4 per cent to 5 per cent.
The finance minister also exempted seven specified computer parts from special additional Customs duty.
He also reduced the countervailing duty on computer printers from 10 per cent to 5 per cent and removed the special additional duty of 4 per cent.
The finance minister further sweetened the proposal to charge a lower tax of 15 per cent (as against 30 per cent earlier) on dividends received by Indian companies from foreign subsidiaries by extending the benefit to companies holding 26 per cent or more in subsidiaries as against 50 per cent proposed in Budget.
CA Dinesh Gupta
Mobile : +919811046053
email : dkg1966@gmail.com
Skpe : dkgindia
Director : Gseven Computer Business P Ltd (Master Tally Partner)
Blog: www.dkgindia.blogspot.com
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