SME Times News Bureau | 05 Apr, 2010
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the government to exempt companies from paying service tax on marketing and sales promotions in rural areas.

In It’s Post-Budget Memorandum submitted to the Finance Minister, Mr. Pranab Mukherjee by ASSOCHAM President, Dr. Swati Piramal, it has been highlighted that rural folks have already started stimulating demand for products and articles of Indian industry and therefore these can be rewarded in form of tax concessions by serving them sales at reduced rates.

Tax exemptions, she said, will not only help stimulate demand for quality products in rural areas but also prevent widespread use of fake products.

Not only rural folks would be its beneficiary but it will equally percolate to manufacturers. Indian industry keeps a record of its rural sales and amount spent on marketing and sales promotional activities with documentary evidences for claiming service tax exemptions, pointed out Dr. Pirmal.

The suggested move if accepted will not only enhance sales of branded and quality products in rural areas but also prevent widespread use of fake products in rural economy. It will also create awareness among rural masses for high quality consumer goods and prevent to a large extent unscrupulous players take advantage of current reality of flooding rural markets with goods of sub-standard quality, pointed out  the ASSOCHAM representation.

The service tax exemption can be worked out by making rural sales as benchmark and amount clearly spent on sales and marketing activities since Indian Inc. always has its record with it, feels the ASSOCHAM.

Since the next level of growth is coming from rural as well as tier II and tier III cities due to availability of income, arising out of social beneficiary schemes of UPA government like NAREGA, Indira Awaas Yojana and Bharat Nirman which have lent greater purchasing power in hands of rural folks.

Therefore, with a view to further enhance their buying capacity, a suggestion to exempt sales and marketing efforts and expenses from service tax for rural areas should be worthy of consideration. This is because it will serve twin purpose of increasing rural sales at reduced rates and also articulate government commitment for deepening inclusive growth in rural areas.