PRE-BUDGET MEMORANDUM 

    Extracts from Pre - Budget Memorandum submitted to the Central Government by FOSMI on 06-12-2005 both in respect of Direct and Indirect Taxes including Service Tax.

CENTRAL EXCISE:

A Small Scale Exemption:

a. Proposed that present exemption limit should be enhanced from Rs.1 crore

              to Rs. 3 crore with slab rate as under:

 b. The eligibility limit be raised to Rs. 5 crares against the existing limit of Rs. 4 crores. c. The duty concession to SSI units availing Cenvat credit facility should be restored and the slab exemption prescribed as under..

eB. B. Exemption from Central Excise Registration:

The existing limit of Rs. 40 lakhs for Registration purposes should be raised to Rs. 2.75 crores in keeping with proposal for enhancement of exemption limit for excise levy from Rs. 1 crore to Rs. 3 crores. If the exemption limit cannot be raised, the present exemption limit of Rs. 1 crore for excise levy should not be disturbed and the earlier limit of Rs. 90 lakhs for the purpose of registration under Rule 9 should be restored.

C. Specific exemption for specific purpose:

   i)  Financial benefit and tax exemption both direct and indirect available to manufacturing units operating in backward areas in the states of Assam. Bihar. Jammu and Uttaranchal be extended also to Industries growing up in the backward areas in the- state of West Bengal particularly those falling in 1he Districts of Bankura, Purulia, Birbhum, Siliguri, Jalpaiguri, Coochbehar and Darjeeling.

         ii) Complete exemption from duty should be given to_ "Hand Care Medical investigation and examination plastic gloves" should be given similar to one given to Medical and Surgical gloves or Medical Examination gloves made of rubber, under Notification No. 6/2000­CEdt.01-03-2000. "

iii)      Notification No. 13/2002-CE(NT) dt. 01-03-2002 _authorizing assessment or. the basis of 'Maximum "Retail Price" allows same percentage of abatement both for large scale unit brand product and SSI brand product. It has been proposed that higher percentage of abatement (say 50%) should be allowed to specified goods manufactured by SSI units in comparison to percentage of abatement (say 40%) allowed in the case of big units engaged in making similar products.

        D. High Incidence of excise duty:

   There should be only one rate, namely, 8% Adv. for all goods specified in Central Excise Tariff Act, 1985. If a common rate@ 8% Adv. is not possible, the rate of duty should be reduced to 10% Adv. from 16% Adv. in respect of excisable goods where mass consumption is involved bringing tax relief to ordinary consumers and small scale industry.                .

        E. Other Financial Relief and procedural relaxations:

   SSI units are now permitted to pay excise duty on monthly basis and file return on quarterly basis: Same principle should be adopted and the SSI units allowed to pay excise; duty on quarterly basis.

         F. Service Tax & Education Cess:

   i) . The rate of Service Tax be kept at 8% Adv.

   ii)  The general exemption limit of Rs. 4 lakhs intended for small scale service providers, vide Notification No. 6/2005. Service Tax dt. 01-03-2005 be raised to Rs. 12 lakhs.

   iii) Service Tax on Business Auxiliary Service so far job working is concerned should be abolished,

  iv) Service Tax .em Telephone Serwices _hould be abolished_as it affects not only small scale industry but also ordinary consumes,

  v) Service Tax on Road Transport Service should also be abolished mainly on the ground that levy has raised controversy between a consignor and a consignee on the question of registration and liability to be borne for payment of service tax.       

  vi) Levy of education cess be abolished as it has done, great financial harm to the industry and common people.         

 G. DirectTaxes:

  i) Tax relief should be extended to agro processing industries, meat, poultry, fish and hand tool industries. 33% deduction from the gross income has been claimed for computation of total income.

 jj) Abolition of Pringe Benefit tax has been recommended.

 jji) Separate chapter in the I. T. Act should be provided for Export Incehtive and Section 10Al10B rationalized to cover traders and Businessman.

  iv) Entry taxshould be abolished in view oHhe proposed phased abolition of Central Sales Tax.