Retailers, manufacturers, exporters, and the logistics companies – all have a long list of expectations from the upcoming Budget, says Ravi Shingari , Senior Manager, KPMG. The retail sector expects the Government to take note of its well-deserved expectations and bring about positive and encouraging policy changes to help provide a boost, adds Mr. Shingari, in the course of a brief pre-Budget interaction with Business Line , over the email.
Excerpts from the interview.
On tax issues
Under the current tax system, in the absence of the facility to offset between the federal and State taxes, the effect of cascading gets built into the transaction cost associated in the retail supply chain.
GST seeks to consolidate the relevant chain taxing statutes at the Central and the State level into a single comprehensive tax structure entailing possible reduction/ optimisation in the overall indirect tax costs on account of rationalised rate structure, smooth flow of tax credits and minimal tax cascading for retail sector.
Therefore, a concrete framework and roadmap for the introduction of GST should be laid out in public domain and the same should be implemented at the earliest.
Tax incidence on account of excise and VAT on food products such as tea/ coffee premixes, vending premixes may be lowered. Lowering of custom duties on food products and raw materials for food products (e.g. confectionery products, frozen foods etc), and other essential food commodities should also be considered.
Further, at present, fiscal incentives are primarily applicable to amalgamation of companies owning an industrial undertaking. The Budget may consider extending the benefit of carry forward and set-off of losses for income-tax purposes in the case of amalgamation in the retail sector.
On other issues
Though typically the Budget is associated with modifications in the tax policies, the following regulatory demands may also be considered by the Government along with the Budget for the betterment of the retail industry:
•The industry has constantly advocated that 100 per cent foreign direct investment (FDI) should be allowed in single-brand retailing. Currently, FDI up to 51 per cent under single-brand retail trading and 100 per cent in cash-and-carry wholesale formats is allowed under the automatic route.
•Further, FDI may be allowed in multi-brand retailing, if not completely, then partially to begin with. The stalwarts of the retail industry believe that this development shall speed up the growth of organised formats in the country leading to lowering of prices, improving the quality of products and widening the choice of products available to consumers.
•The industry has pressed the Government for long to give retail its due credit and recognise it as an industry.
•External commercial borrowings (ECBs) are not permitted in the retail sector. The Reserve Bank of India (RBI) liberalised ECB guidelines by permitting hotels, hospitals and software companies to avail ECB up to certain prescribed limits; retail sector has been left out. Liberalisation of ECB policies can help the retail players in augmenting their funding requirements.
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