IIA has submitted its suggestions to Shri Pranab Mukherjee Hon'ble Finance Minister & the Development Commissioner MSME for Budget 2012-13 with specific reference toMSMEsin the country.

Some of the main features of IIA's Budget Proposal are being summarized here while complete details may be accessed at http://www.iiaonline.in/doc_files/Budget%20Proposals2012- 13(FM).pdf.

INCOME TAX

• the rate of depreciation on plant and machinery for MSME sector be enhanced to50%from15%
• income tax rate for manufacturing enterprises inMSMEsector be reduced to20%from30%
• there should be a Systemof reprimand forwrong assessments.
• the powers of Surveys u/s 133A should be exercised by the Director of Investigations and only in deserving rare&exceptional circumstances
• delay in filing Income Tax returns in the case of loss return, upto the close of financial year should be condoned.
  
• Rationalizing the disallowance of cash payment U/S 40 –A(3) is highly recommended
• TDS amounts should be allowed to be adjusted in any of the Assessment Years up to 3 years following the year of issue of certificate and Procedures should be simplified
• In order to reduce the cumbersomeness of Online tax payment system, assesses should be required to furnish PAN /TAN as the case may be and all other static details should appear automatically.
• for Micro & SSI entrepreneur it is very difficult to calculate/estimate the tax liability for whole year in September or December, because many times they get good business at the fag end of the year. Hence, their liability of advance, tax should have provision to pay by Mar.15 without and overdue Interest/Penalty and the threshold limit should be enhanced to Rs 50000/ fromthe present value of Rs 10000/-.
• Limit of Compulsory Audit should be enhanced to Rs.1 Crores.
• Threshold limits under section 269SS and 269T should be raised to Rs. 50,000/-
• Valuation of assets should be based on actual market value for which proper procedures and norms should be prescribed.

CENTRAL EXCISE

• Exemption limit of Excise Dutymust beminimumRs.2 Crores
• Restore the fiscal stimulus by reducing general rate of Excise duty to 8%.
• Central govt has allowed duty free garments imports from Bangla Desh, whereas the Govt has imposed excise duty @10% in March 2011 budget. Direct impact of this is that made up garments imported from Bangladesh are cheaper by up to 15%. This will adversely affect the survival ofmadeup garment industry in India. Hence, the govt must roll back the excise duty to save the Indian garment industry

SERVICE TAX

• The exercise of identifying the Negative List of Services should be taken up with GST. Doing so at present will complicate the system of Service tax un-necessarily.
• the concept of "Reverse Charge" in the Goods transport services must be done away with. Only transporters must collect and deposit service tax on GTS services. All category of GTS service availers be allowed to de-register fromservice tax and thus finally put an end to duplication of samework.
• rate of service tax must also be moderated down to not exceeding 8%in line with the general rate of Excise Duty.
• liability of Service Tax onMSMEIndustry Associationmembership fee should be exempted.
• Any entity registered under Service Tax Act / Rules should be allowed to render any other service which is taxable under Service Tax Act without requirement of any additional registration or modification in the existing registration.
• Threshold for applicability of Service Tax should be enhanced fromRs 10 Lacs to 15 Lacs.
• Insurance Premiums should be taken out fromService Tax net
• Service Tax on rent ofimmovable property should be abolished,

CST,VAT and GST
(Competition on the basis of difference in Tax Rates should be avoided)

• rate of CST should be immediately brought down to 0% without any further delay. One of the major positive implications of this move would be push the inflation in to downward spiral and thus hastening the process of normalization of overheated economy.
• GST should be implemented and its modalities which should be discussed with various industry associations representing MSME sector.
• VAT Rates in all commodities across all States should be uniform

OTHERISSUES

• Micro and Small Scale Sector plays significant and important role in the socio & economic conditions of the Country. Govt. may therefore issue clear instructions not to deny the right to equality to this sector and ensure the implementation of its policies of promotion of this sector in right earnest.
• Enforce stricter accountability for Govt officials delivering various services to citizens.
• Any amendment having effect on taxability should not be made retrospectively. Such amendments causes serious consequences especially forMSMEs.
• RBI may be directed by the Govt. to revoke their decision vide circular No. RPCD.SME & NFS.BC.No.19/06.02.31/2011-12 dated 12th September 2011 and put in placemore strict guidelines to all Scheduled Commercial Banks for rehabilitation of viable / potentially viable sick MSME units. These guidelines should also be monitored strictly.
• A suitable scheme may be devised by the Government to provide SOCIAL SECURITY TOMSMEENTREPRENEURS
• EXIT&INSOLVENCY POLICY FORMSMEshould be put in place