Industry body CII has suggested a graded road map towards competitive import tariffs over three years, with lowest or nil slab between zero to 2.5 per cent for raw materials, highest of 5 to 7.5 per cent for finished goods and 2.5 to 5 per cent for intermediates, as part of its pre-Budget recommendations to the government.
The Confederation of Indian Industry (CII) has proposed the road map to encourage domestic manufacturing in alignment with global trade trends that would boost India's export competitiveness as per shifting global value chains in the next three to five years.
"This will help Indian industry integrate into the global value chain while becoming competitive with its goods and services in the world markets," the industry body said.
Making a case for the need to boost to employment at higher levels, the CII suggested raising the cap on emoluments to Rs 50,000 per month to encourage employment in higher skilled jobs.
Section 80JJAA, provides for deduction of 30 per cent on emoluments paid to new employees, which can be claimed for three years. This is available up to Rs 25,000 per month.
Besides, over last few years, it is seen that to enhance the financial strength of banks and for stability of the financial sector, the RBI has mandated that banks should augment their non-performing assets (NPA) provisioning.
The CII has suggested that the limit prescribed under section 36(1)(viia)(a) for provision for bad and doubtful debts for Indian Banks should be increased from the existing limit of 8.5 per cent to 15 per cent, it stated.
Banks operating in India facilitate foreign investment by Foreign Portfolio Investments (FPIs) by acting as custodians (cash and securities) for the FPIs investing in India.
The industry body said specific clarification should be provided so that banking and broking service providers are not held as representative assessees of their clients. Moreover, the RBI has lowered the limit for recognising an account as NPA from 6 months to 90 days.
"Rule 6EA should be amended to provide that in case of banks, the interest on NPA which has become overdue for more than 90 days should be excluded from the total income and be taxed only on receipt basis," said the CII.
"All the above initiatives would go a long way in bringing growth back to the economy and moving once step ahead towards a taxpayer friendly regime," it added.
According to the industry body, its recommendations take cognizance of the stressed fiscal situation arising from a sharp decline in revenue collections due to the COVID induced economic slowdown.
The Union Budget 2021-22 is likely to be presented in Parliament on February 1.