Industry body Assocham said on Monday that government should scrap various surcharges, fringe benefit tax and education cess imposed on the industry to achieve a growth rate of 15 per cent in the manufacturing sector.
"Indian firms currently pay taxes that are among the highest in the world," a 20-point paper of the chamber submitted to the government said, adding "...tax structure is prohibitive to growth in the industry".
The tax rates for Indian firms, including surcharge, education cess and a fringe benefit tax, ranging between four to six per cent amounts to 38 per cent.
This again is without considering the dividend distribution tax which Indian firms are liable to pay on dividends declared, it said.
"There is a definite case for the removal of the surcharge. Typically surcharges are for specified purposes and for a period
of time. But what tends to happen is that it becomes a levy charged for time immemorial," Assocham secretary general D S Rawat said.
The chamber said that trade policy approach should be to create an enabling business environment to promote large-scale investment for expanding manufacturing capabilities and increasing higher value added exports.
Technological upgrading of India's exports will not be possible without a considerable emphasis by the corporate sector on in-house R & D activity, it said.
"The government needs to examine the desirability of more direct incentives to R & D activity to further the international competitiveness of national enterprises as a part of strategic trade policy," it added.
It said connectivity between agriculture and manufacturing sector can be the engine for high employment growth.
