Increase in withholding tax will send negative signals to NRI investors: FICCI

Chennai:

Federation of Indian Chamber of Commerce and Industry (FICCI) on Friday said that the increase in the rate of Withholding Tax from 10 per cent to 25 per cent in case of non –residents will also send negative signals to diaspora investors.

During a post budget discussion, FICCI experts urged the government to reconsider its decision to increase the rate of withholding tax while calling for a status quo to be maintained.

On the Goods and Services Tax, FICCI expressed its  happiness over Finance Minister setting aside Rs 9000 crore in 2013 -14 for compensation to the states for the reduction in cost.

“This is a step to reach out to the state governments to resolve the impasse over this issue. However a clear road map on the introduction of GST still remains elusive,” FICCI experts added.

S Ramakrishnan, Commissioner of Income Tax, said that the Union Budget 2013- 2014 is a good Budget as it has a number of good specifics to get investments going again with a good push.

He added that the Finance Minister has shown restraint in not increasing the tax rate and guidelines regarding financial restructuring of distribution companies have been announced.

On the infrastructure side, the experts said government move to offer credit enhancement via IIFCL – Asian Development Bank partnership to infrastructure companies that wish to tap the bond market and allowing notified institutions to raise tax free bonds up to Rs 50000 crore will help spur investments in this sector.

V Ranganathan, Partner – Tax, E & Y said that it has been a promising budget with ten years under single prime minister and two financial ministers. Now the next six to seven years may not be very stable, he added.

Shakuntala, Chief Commissioner of Central Excise and Service Tax highlighted that exemption of Tax withdrawn on restaurants having facility of air conditioning or central air heating.

She also highlighted the proposal to increase specific excise duty on cigarettes by 18 per cent (also cigars, cheroots and cigarillos) is expected to have a neutral impact on the industry as large cigarette manufacturers will be able to pass it on to consumers.

Mala Srivastava, Chief Commissioner of Customs, Tamil Nadu said that the basic customs rate remains the same and reduction of 5 per cent from 7.5 per cent on Textile machinery will make it affordable for manufacturers