REGULATORY BODY FOR REAL ESTATE SECTOR MOOTED

Thesynergyonline Real Estate Bureau

NEW DELHI, JULY 03 :
THE real estate industry has only three expectations to be included in the wish list of the upcoming budget:

We hope that with the new UPA government now firmly entrenched, a status to be given to the body of real estate developers. We have made this request several times in the past but it seems to have fallen on deaf ears. As an industry, after agriculture, we are the second largest indirect employers with over 270 other industries depending on us and our constructions for work and business. While other less significant industries have received a status, we still struggle to be heard.

We also want a regulatory body to be formed for the Real Estate sector. One that will not only regulate what we do but also one that will regulate other third parties that we interact with including the government. One of the most common grievance shared by all real estate players is that approvals take very long to come in which results in inordinate delays of time and money and that snowballs in to a tremendous loss of goodwill and getting the reputation of being developers that do not deliver on time.

The third and most important expectation is that the government takes over the mandate of affordable housing. Owning a home of their own is a dream that everyone has. The market for super luxury, luxury and even mid level residential housing is not growing as much as the demand for affordable housing.

Affordable Housing is an area that is usually the mandate of the government but unfortunately in India , this segment has been neglected by the government and so the real estate sector has taken the onus upon themselves. However, as a representative of the real estate industry, what we would like is for the government to look favourably upon those developers who are promoting and building affordable housing by bring back the tax cuts and subsidies that were once given by the government. (editor@thesynergyonline.com)

MORE EMPHASIS ON EDUCATION SECTOR , UNIFORMITY IN TAXATION ON PACKAGED SOFTWARE MOOTED

Thesynergyonline Economic Bureau

NEW DELHI, JULY 01 :
FTK Technologies , the developer of unique and comprehensive Indian languages word word processor software products, data entry software and online solutions, announces its wish list for Budget 2009.

Rafi Palgi, FTK Executive Manager of FTK Technologies Ltd., says, "Every industry has a lot of expectations from the budget 2009 as the last one year has been very tough for the economy. Last year's impressive budget outlays for education sector had raised the hopes of all those associated with this. We do expect that even this year, the government lives up to its promise by helping education sector and ensuring computer education for all the studies."

He adds, "First and foremost, a further increase in our budget outlay for education in general as some long-standing and yet unresolved problems still persist. There is also a case for improving the quality of education imparted in the case of government-run schools and colleges. Reform is required at the level of curriculum-development. Also, one needs to ensure that the students actually graduate with at least a minimum level of computer skill that helps them to compete in the job market."

Rafi says, "For computer education in schools and colleges, government should help them to acquire infrastructure. It could include computer hardware, necessary software, faculty, bandwidth, etc. The government should emphasise and encourage the schools to adopt software which can enable the students to learn and compute in their own language."

"In order to help the software industry help the education sector there should be further cut in the excise duty from currently 12% to 8%. The double taxation that is prevailing on the packaged software including both excise duty or countervailing duty (CVD) and service tax should be removed and should be only one tax levied on packaged software, preferably excise duty. By abolishing the dual taxation system will actually help the overall price of the software to be cheaper.

There is confusion on the taxation in the software industry. The packaged software attracts excise duty/CVD, no excise duty/CVD is charged on customised software on media or on license of customised software or even on license of packaged software. When software is downloaded from the internet, it is subject to service tax. The State Governments also levy a VAT on software. Due to various modes of delivery of software, licenses and due to various kinds of software, there is no clarity on the exact taxes to be levied. There needs to be clarity whether software would attract excise duty or service tax, as the same item cannot attract both excise duty/CVD as well as service tax. (editor@thesynergyonline.com)

'BRING COACHING INSTITUTES UNDER INCOME AND SERVICE TAX'

Thesynergyonline Economic Bureau

NEW DELHI, JUNE 18 :
HEAVILY tax coaching institutes, minting money on preparing young aspirants for their entry into civil and armed services, medical, engineering and management institutes of repute as these hardly make any disclosure of tuition fee annually accumulated by them, proposes The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

In a note submitted to the Revenue Department of the Finance Ministry, the ASSOCHAM has stressed that hundreds of coaching institutes, claiming expertise in fulfilling aspirations of young graduates to enter into aforesaid prestigious services are mushrooming and charging astronomically higher fee without submitting proper accounts of their income to tax authorities.

The Chamber, therefore, holds that such institutes as make tons of money in the name of imparting perfect knowledge to young students, seeking to make career in civil and other services through competitive examinations, conveniently evade taxation though they charge unbelievable amount of money for preparing candidates for IITs and IIMs.

Mr. D S Rawat, ASSOCHAM Secretary General however, says that time has come when tax authorities ought to awake to subject coaching institutes not only to income tax but other taxes such as service tax, since these earn lot of money in a year from young students.

The Chamber which is giving final touches to its proposal for subjecting coaching institutes to tax liability as part of its corporate social responsibility holds a view that roughly over Rs,10,000 crore of money annually is made by over 100 coaching institutes run across the country to prepare educated youths for IITs and IIMs alone.

Likewise, there are other coaching institutes located in various parts of the country particularly in lead metros and large townships charge fabulously for preparing eligible bachelors for civil and provincial services and armed forces. There are coaching institutes that claim to be preparing eligible graduates for management trainees and probationary officers in public sector undertakings as well as banking system.

The coaching institutes have been flourishing over the years as they charge very high professional fees without making the disclosures of their income to relevant tax authorities and go escort free as far as their mandatory tax deposits are concerned.

The Chamber, therefore, seeks that such institutions should be brought under the tax net and tax authorities should conduct a detailed monitoring of their income as it is alleged that while enrolling students for career making in such institute, their management hardly give them documentary evidences for receipt of their fee. This should stop now, feels the Chamber.

It has mooted that the business of providing coaching should also be managed by the government as it involves lot of monetary benefits. The government has over 957 employment exchanges located across the country with huge assets base. Since, the intended purpose of employment exchanges have lost its relevance in new economies, majority of them should be converted into coaching institutes not only for civil and armed forces but also IITs, IIMs and other vocational courses.

According to ASSOCHAM, the main reason for declining share of employment opportunities by employment exchanges is mainly due to ample job opportunities provided by private job portals and other online players which conduct quick interviews in hassle-free atmosphere with quick placements services.

The other state-owned recruitment centers like Union Public Service Commission, Staff Selection Commission, Railways Recruitment Board, Banking Service Commission which make direct recruitment have also eroded the efficiencies of the employment exchanges.
Since, mainly these employment exchanges provide jobs to middle-class, the Fee Structure in these centers should be at concessional rates with no compromise on quality of faculties and infrastructure. (editor@thesynergyonline.com)

'EXTEND 5 YEARS' HOLIDAY BENEFITS TO 5- STAR HOTELS

Thesynergyonline Economic Bureau

NEW DELHI, JUNE 16 :
THE Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested for extension of tax holiday scheme of 5 years to all categories of hotels including those of 5 star hotels, especially in Delhi and NCR to speed up infrastructure of hotels rooms, needed for Commonwealth Games of 2010.

The ASSOCHAM has pointed out that in Union Budget of 2007-08, tax holiday scheme of 5 years for 2 Star, 3 Star and 4 Star hotels and Convention Centres with a seating capacity of not less than 3000 in the NCR area of Delhi, Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad was given to speed up the infrastructure of hotel rooms for Commonwealth Games of 2010.

This facility , according to the Chamber, needs to be extended to all categories of hotels including of 5 star hotels so that their capacity expansion takes place at desired speed to accommodate large number of travelers to India during 2010 games.

The hotel infrastructure, especially in 5 star hotel category in Delhi and NCR where majority of tourists are likely to take shelter in is still not taking off and therefore to speed up their capacity, 5 years tax holiday schemes requires to be extended to this category, besides other.

The ASSOCHAM in a representation recommended to the Delhi Government that it should persuade the Finance Ministry to announced extension of 5 years holiday scheme as per proposal mooted by the ASSOCHAM so that hoteliers get tax benefits and are incentivised to execute their expansion plans.

The Secretary General ASSOCHAM, Mr. D S Rawat said that it has forwarded the same proposal to Ministry of Finance, also demanding that infrastructure status for hotel industry should not be delayed any longer since hotel industry is highly capital intensive industry and each 5 star hotel is built with massive capital investment, ranging from Rs.300 crore to Rs,500 crore. The bulk of investment in hotel is on land and building which has a very long period of return on investment to the investors.

Therefore, in a bid to accelerate the pace of construction of more hotel rooms, the hotel industry needs to be declared an Infrastructure Industry under Section 80 I/A of the Income Tax Act 1961 and should be given full benefits of concession for infrastructure facilities, available to other sectors like airports, seaports, power projects and gas distribution networks.

According to ASSOCHAM estimates, keeping requirements of hotel rooms in view, especially during Commonwealth of 2010, there are already 70 new hotel projects that are under various stages of development to add 19,000 rooms in next 2 years.

Some of leading hoteliers are also looking for ideal sites in Delhi and NCR region for establishing their chains to strengthen hospitality industry. In NCR alone, around 27 new hotels are coming up with approximately 4,900 rooms in various categories over next three to four years, with nearly 20 new hotels likely to come up in Gurgaon. Even Radisson has already set up its hotel in Noida's prime place and other players like J P Group, Inter-continental, Clark Group, Chatwal Group are also planning to build 250-300 rooms hotel in NCR.

In view of expected massive capacities likely to put up in hospitality sector, the ASSOCHAM recommendation for extension of 5 years holiday schemes to all categories of hotels and conferment of Infrastructure Status on this industry makes an economic sense and therefore, accepted at once.

The Chamber has also reiterated its demand for removal of service tax on hotel industry since these are required to pay services tax on services received outside the territory of India, especially commission paid to foreign travel agents. Hotel industry is one of the prime foreign exchange earners and is recognized as a service export industry.

The Chamber has therefore recommended that hotel should be exempted from paying service tax on services received from foreign tour operators. Also under the existing provisions, banquet (outdoor as well as indoor catering), guests are charged both the service tax on food and beverages and VAT. This amounts to double taxation for the guests. It is therefore recommended that only VAT be charged on food & beverages and provision regarding service tax in banquet catering be deleted. (editor@thesynergyonline.com)