Tax relief not to benefit Faridabad industries

Bijendra Ahlawat

Tribune News Service

Faridabad, September 23

Last week’s tax cut announced for the industry by Union Finance Minister Nirmala Sitharaman is unlikely to provide a boost to a majority of industrial units located here that have been reeling under an economic slowdown, say some entrepreneurs.

“Faridabad has about 60,000 businesses registered under the Goods and Services Tax (GST) regime, out of which 55,000 are registered as proprietorships or partnerships or Hindu United Families (HUF),” says Rajive Chawla, president of the Integrated Micro, Small and Medium Enterprises of India, a leading organisation of small and medium industrial units here.

“While the announcement is a welcome move for large corporate houses, the annual turnover of which has been above Rs 250 crore, most of the manufacturing units here fall in the small and medium category (MSME). Hence, they do not get a direct and immediate benefit,” he claims, adding that there are only 200 businesses in the city that will get a boost in the form of reduced tax. The companies with a turnover of less than Rs 250 crore are slated to get the benefit of only three per cent in the matter of the overall tax paid by them. “It leaves 97 per cent MSMEs that work as proprietorships or partnerships or as HUFs under the Companies Act shall continue to pay taxes at the existing applicable rates up to 30 per cent plus the surcharge,” he adds.

“As new investments by big corporate houses for expansion or in new projects shall take time, the recent announcement is unlikely to provide any major or immediate incentive to boost sales,” says Ramneek Prabhakar, general secretary of the Manufacturers Association Faridabad. Most of the small units have been experiencing depression due to a fall in demand, he says. The GST is too high for many products of daily use, he adds.

“Since there is no immediate relief in the GST and income tax for consumers, the revival of automobiles and other related or inter-linked sectors in the near future may not happen,” says a senior member of the Faridabad Industries Association.