Hike in service tax will further increase food inflation: CICU

FICO President G S Kular said no incentive to MSME and no change in investment limit of MSME comes as a setback.

Members of FICO duirng a discussion on Budget 2015-16 in Ludhiana on Saturday. (Source: Express Photos)

Industrialists welcomed the corporate tax rate reduction to 25% for next four years and reduction in taxes on technical Services from 25% to 10%. They, however, opposed the hike in service tax from 12.36% to 14%. Industrialists from Chamber of Industrial and Commercial Undertakings (CICU) were of the opinion that this will further increase inflation in the country.

“Food should be available to all at affordable price. Already we pay a lot of tax on food and hotel industry. This hike is uncalled for. Food inflation paves way for inflation in all other segments,” said Dr Anshu Vatsayan from Ludhiana. Service tax hike will fatten the phone bills, transport bills and much more. Hike in central excise duty from 12.36% to 12.5% was also not welcomed. The ultimate burden will be on the common man as products will be costlier in market.

G S Kular, President of Federation of Industrial and Commercial Organization (FICO), said, no incentive to micro, small and medium enterprises (MSME) and no change in investment limit of MSME comes as a setback.

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However, Punjab Tax Bar Association (PTBA) members welcomed the budget on the whole. Ashok Juneja, President, PTBA, said that wealth tax replaced with additional surcharge of 2% on super rich with a taxable income of over Rs 1 crore annually is a good step. PTBA still demanded from Jaitley that Income Tax rates be slashed down from 30% to 25% of income since it will increase the revenue and number of income tax assesees. Now only 3% of Indian population are income tax assesees which can be increased to 10% by taking effective steps.

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Badish Jindal, another industrialist said that the budget will increase inflation in all as the service industry charges will have an impact on various sectors.

However, reacting to the health sector Dr Arun Mitra, general secretary of Indian Doctors of Peace and Development (IDPD) said that the non-fulfillment of demand to increase budget allocation on health to 6% amounts to completely ignoring the healthcare needs of the people of country.

Dependence on the insurance sector for health means giving hefty business to the corporate involved in the health insurance sector. Moreover, there is no mention of drug price control and rationalization. There is also no mention of linking health with food security and other securities like housing, clean drinking water, job security and proper remuneration.

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