Discrimination against water transport continues. Currently FAME 2 support only for electric vehicles and not for electric boats.
GST for boats is 5%. However input tax is 18% and 28%, average is 20%. Hence input tax is higher.
Tax inversion refund takes time.
Service tax input is not refunded. Hence incentivised to use vendors without GST.
Working capital financing is announced. CGTMSE limit increased? We wait for details.
App-based Invoice financing loan products will be launched. Await details.
Large govt. shipyards like CSL (Cochin Shipyard) with more than 3000 Cr turnover, instead of building ships, are building small boats of 1 Cr value and killing MSME shipyards who should be building them.
Returns to shareholders
Dividend distribution tax of 15% plus surcharge removed and tax at income rate of recipient. For foreign investors it is welcome, however, in case they are in highest bracket of 30-42%, then it is much higher tax.
Manufacturing, existing versus new
Existing unit is at 22% and new unit is 15%. Need tax parity. Another case of new entrants getting more benefit compared to early entrants.
ESOPS extension of tax by 5 years is welcome step.
Increased eligibility for tax exemption from 25 Cr to 100 Cr is good.
Increase time frame from 7 yrs to 10 yrs is good.
However eligibility is applied to startups formed after 2014. When the time period is increased, the existing startup at the time of law not given benefit.
Vivad se Vishwas
Officials are incentivised to put penalty since they have monthly quotas on tax collection. Unless that changes, announcements alone will not help. Even for getting customs department to follow notification issued by finance ministry failed. We already have an appeal filed on customs levying 28% tax on engine although boat engines GST should be 5% as per notification (boats have GST of 5%).
Make in India
Govt. shipyards like CSL (Cochin Shipyard) discriminates against Indian firms and manufacturing in India by pushing for foreign vendors both by preference for technology architecture as well as discrimination on currency exchange risk.
When Central Govt. PSU, Defense tenders go for global tender, forcing financing (due to payment terms), MSME with high cost of finance cost (12-16%) are at disadvantage against foreign players who get finance at 2-3%.