Lok Sabha Question No. 3811 (UNSTARRED), answered on 2017-03-24
Subject: Uniformity in the Import Duty Structure
Ministry: FINANCE
Asked by: RITA TARAI, KULAMANI SAMAL

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA UNSTARRED QUESTION NO.  3811

TO BE ANSWERED ON FRIDAY, MARCH 24, 2017 CHAITRA 3, 1939 (SAKA)

## UNIFORMITY IN THE IMPORT DUTY STRUCTURE

3811: SHRIMATI RITA TARAI:

DR. KULAMANI SAMAL:

Will the Minister of Finance be pleased to State:

- (a) whether  the  Government  has  taken  appropriate  policy  measures  to  encourage manufacturing and formalization of the different sectors of the economy by in view of demonetization, new goods and service tax and rationalisation of direct tax regime and if so, the details thereof;
- (b) whether  the  Government  proposes  to  bring  about  uniformity  in  the  import  duty structure to encourage the manufacturing sector; and
- (c) if so, the details thereof and action taken thereon?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

(a):

## Direct Tax

As regards policy measures taken to encourage manufacturing and formalisation of the different sectors of the economy in view of the rationalisation of the direct tax regime, some of the steps that have been taken are as follows:-

- (i)    Government  has  stated  as  part  of  its  policy  that  corporate  tax  will  be  reduced from 30% to 25% over four years. As part of this commitment, it was provided vide Finance Act ,2016
- (a) that  new manufacturing companies which are incorporated on or after 1.3.2016 will be given an option to be  taxed at 25% + surcharge and cess provided they do not claim profit linked or investment linked deductions and do not avail of investment allowance and accelerated depreciation; and
- (b) that corporate income tax rate of relatively small enterprises i.e companies with turnover not exceeding Rs. 5 crore (in the financial year ending  March 2015) would be reduced to 29% plus surcharge and cess for FY 2016-17.
- (ii)  Further,  it  has  been  proposed  to  reduce  the  income  tax  for  smaller  companies with annual turnover up to Rs. 50 crore to 25%. The proposed reduction will benefit 96% of the companies, making the Medium, Small and Micro Enterprises (MSME)

sector - which occupy the bulk of economic activities and are also instrumental in providing maximum employment to people.

(iii)  To provide relief to small tax payer, rate of tax is proposed to be reduced from 10% to 5% in the income slab of Rs 2,50,000-5,00,000.

(iv) To achieve the Government's mission of moving towards a less cash economy and to incentivise small traders /businesses to proactively accept payments by digital means in order to formalise different sectors of  the economy, it has been decided to reduce the existing rate of deemed profit of 8% under section 44AD of the Incometax  Act,  1961  ('the  Act')  to  6%  in  respect  of  the  amount  of  total  turnover  or  gross receipts  received  through  banking  channel  /  digital  means  for  the  financial  year 2016-17. This  would  enable  small  business  to  make  a  tax  saving  of  almost  46%.  This benefit is proposed to be provided for all small business having total turnover or total receipts  of  Rupees    two  crore  or  less.  Legislative  amendment  to  the  Act  in  this regard has already been proposed in the Finance Bill, 2017.

## Indirect Tax

A  number  of  measures  have  been  taken  to  incentivise  and  promote  domestic manufacturing and formalisation of different sectors of the economy in the past three Union Budgets. These steps include reduction in Basic Customs Duty (BCD) and/or Additional  duty  of  customs  in  the  form  of  CVD  or  SAD  to  reduce  the  cost  of  raw materials. Further, under the Goods and Services Tax (GST) number of Central and State  taxes  will  be  subsumed  into  a  single  tax,  mitigating  cascading  or  double taxation  and  creating  a  common  national  market.  The  key  provisions  of  the  GST architecture  such  as  tax  rate,  laws  and  rules  have  been  discussed  in  the  GST Council.

(b) & (c):  There is no proposal to bring about uniformity in the import duty structure to encourage the manufacturing sector.

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