The Chief of Bureau
Print & Electronic Media
Sub.: Seeking KIND INDULGENCE of HON’BLE PRIME MINISTER towards issues of
Road Transport Sector – The Backbone of Indian Economy
Respected Madam / Sir,
The “Acche Din”, “Sabka Saath, Sabka Vikas”, “Make In India” & “Ease of Doing Business”, the visionary and inspirational slogans of our HON’BLE PRIME MINISTER that supposed to define the path charted out for well being of people of India remains utopian at least for the Road Transport Sector of India.
The road transport sector of India, which in spite of highest taxpayer to exchequer and employment generator is in dire straits --- just on the verge of collapse. The condition of this sector has further deteriorated in last one year due to plethora of taxes, and regressive policies and laws that only strengthened the web of corruption, harassment, and extortion in the country.
All India Motor Transport Congress, New Delhi is an 80 year old organization, which has been representing Road Transport sector of India countrywide. It has made request Hon’ble Prime Minister regarding Problems of the Road Transport Industry with regards to Toll Tax collected at barriers on the National Highways and the amendments done to section 194 (c) of Tax deducted at source in its various representations.
A) TOLL BARRIER FREE INDIA
Toll barriers are indeed symbols of colonial and have become dens of harassment and corruption.
The Transport fraternity of India cannot sustain operations in light of burgeoning corruption, harassment, and time delays at the Toll Barriers and therefore want that the revenue may be collected as Indirect Taxation.
Since year 2005, AIMTC has been promoting the concept of simple, transparent, accountable, and efficient means of Toll collection and hoped that the Present Government will bring in needful reforms in this sector to provide it an enabling environment and engender efficiencies in its ecosystem. The same was promised by Senior leaders of BJP during the run up to the General Elections but those promises remained unfulfilled.
According to the information placed on the National Highway Authority of India’s website, there are total 373 toll barriers where toll is being collected.
Rs. 1, 73,000 crore as been invested in these 373 toll roads whereas Rs.72, 300 crore has been collected till date (most of the collection figures from toll barriers are available for the year 2013 or 2014.)
Especially, At the 63 Out of these 373 toll barriers, Rs. 22,636 crore has been collected against the investment of Rs.14192 crore yet the collection has been going on at the rate of 100%.(List is enclosed herewith) (Annexure – A)
The Finance Minister in his budget speech has also increased the cess on diesel and petrol from Rs 2/- per liter to Rs 6/- per liter. According to a RTI reply by the finance ministry given to us cess of Rs 2/- per liter was getting revenue of more than Rs 18400 crores in the full financial year 2011-2012 (copy of the RTI is enclosed herewith) therefore cess of Rs 6/- per liter will get more than Rs 55000 crores as revenue. (Annexure – B)
The toll tax revenue collected on all existing 373 toll is about Rs 14170.57 crores (copy of RTI received from NHAI enclosed herewith). (Annexure – C)
The process of collecting toll is not transparent and prone to corruption and malpractices by the toll collectors and concessionaires. Moreover, on the basis of study done by Indian Institute of Management, Calcutta in 2010, frequent stoppages made at the toll barriers result into the loss of man hours worth Rs. 27, 000 crore and fuel loss worth Rs.60,000 crores amounting to a total loss of Rs 87000 crores. Also report issued by C&AG in 2013-14 has pointed towards the mismanagement of crores of rupees in administrative or financial matters in this area. (Copies of relevant pages of the reports are enclosed herewith.) (Annexuer D, E & E+)
The Transport fraternity has no objection against the TOLL revenue and they welcome road development made with the revenue thus generated. But they are against the procedure of paying tax by standing in long queues for long hours at the toll barriers on the national highways.
The much touted “E-Tolling” scheme does not find any favour with the fraternity and has fallen flat with its implementing partner viz. ICICI & Axis Bank.
Pushed to wall by the callous and insensitive approach of the Roads Minister, the fraternity pins its hope on your goodself to provide the Transport Sector “Toll Barrier Free India” without any revenue loss, which may be taken through INDIRECT TAXATION. We expect an alternate method of toll tax collection from the government, which is transparent, corruption free and fair to the road users.
B) RE-INSTITUTION OF TDS REGIME ON TRANSPORT SECTOR OF PRIOR TO FINANCE ACT 2015
Another most regressive policy change that is imposed on this sector is the TDS deduction. However, ostensibly amendment is done to make deductions from transporters having more than 10 vehicles but in reality the consignors and traders are deducting flat 2% from the Transporters. Further, the cash flow is further constricted while most of the cash is required for en route expenses, which are raised at high internet cost from grey market.
The levy of TDS on the Transport Sector has unleashed utter confusion and other practical difficulties like cash flow constriction, difficulties in keeping records, collecting TDS certificates, reconciling and taking refund of TDS, on deposit of TDS by the consignor are well obvious. The working capital is raised at a high cost of about 12 – 14%.
Transporters were already covered under TDS as per 194 (c), but Tax Deducted at Source rate was 0% but now has been increased to 2% in the budget presented by the Finance Minister. (Exemption for Goods Carriage Owner’s owning less than 10 goods carriers in the previous financial year has been given). There is no clarity on several issues, which have been represented to the CBDT’s TDS Incharge. We have received no response their end till date and the amendment has already been implemented from 1st June 2015. It has become very difficult for the transporter and goods vehicle owner’s to manage as transportation is a countrywide system and to verify TDS deduction, issuance of certificate etc. That is precisely why we were given a 0% rate of TDS were all our transactions were reported to the income tax department with the Permanent Account No (PAN). If PAN number was not provided then the TDS was deducted at the rate of 20% of freight payable amount.
With hair-thin margins, abnormally delayed payments and now the operators also incur interest cost on working capital raised at high rates is leading to back breaking scenario Our business has very low profit margins it is feared that it will slip into financial crisis if the rate of 2% of TDS applied on us is not reverted to the original rate of 0%.
We have represented to Hon. Finance Minister of India umpteen times but there has been no response till date. The road transport fraternity cannot sustain under any further financial burden therefore demands that THE AMENDMENT TO SECTION 194 C OF THE IN THE FINANCE ACT 2015 BE REPEALED AND TO RESTORE THE TDS PROVISIONS (VIS-A-VIS ROAD TRANSPORT) TO PRE-FINANCE ACT 2015 POSITION. THE TRUCKING SECTOR IS ALREADY UNDER TAX NET UNDER SECTION 194 C AS PER DECLARATION UNDER 26 Q AT ZERO PERCENT AND IT MUST BE RESTORED.
With operations increasingly getting economically unviable coupled with Government’s apathy the industry leaders adopted the unanimous resolution TO SUSPEND THEIR OPERATIONS NATIONWIDE FROM MORNING OF OCTOBER 1, 2015 as a last ditch effort to save the industry from its imminent ruin.
The Government must wake up and take note of the wave of disappointment and resentment among the fraternity. TOLL BARRIER FREE INDIA & RE-INSTITUTION OF TDS REGIME ON TRANSPORT SECTOR OF PRIOR TO FINANCE ACT 2015 are the TWO KEY Demands of this so called LIFELINE OF THE NATION & BACKBONE OF THE ECONOMY and provider of employment to more than 15 crore people of the country.
WE request HON’BLE PRIME MINISTER Sir, to appreciate our cause and help creation of Corruption and Harassment free environment, which could be achieved through prudent policy initiatives, which are SIMPLE, TRANSPARENT, & ACCOUNTABLE.
WE thank our friends from Print & Electronic Media for appreciating our cause as Corruption and Harassment free environment could be achieved through prudent policy initiatives, which are SIMPLE, TRANSPARENT, & ACCOUNTABLE. We request as well hope that you will educate the Government and the People of India, through your esteemed media on the justifiable demands of this sector, which are in the interest of the Nation.
Bhim Wadhwa G. R. Shanmugappa
President – AIMTC Former President &
#9811033288 Chairman Toll Committee– AIMTC
September 21, 2015