Tax concessions for individuals and specific welfare scheme like consumption vouchers for the low-income population topped India Inc’s wish list for Budget 2025-26.
In their pre-Budget meeting with finance minister Nirmala Sitharaman on Monday, representatives from the industry chambers called for more simplification in tax structure to reduce compliance costs. They advocated measures to raise disposable income, in order to give a boost to consumer spending.
The Budget will be presented on February 1.
Industry bodies also raised the issues of dumping of excess stock by China globally, including in India, and challenges posed to food security and inflation due to the “climate emergency”.
They suggested the government peg capital expenditure (capex) via Budget at a level2 5% higher than Rs 11.1 lakh crore budget estimate for FY25, with enhanced focus on rural infrastructure, even as actual capex this year is likely to be much less than the Budget Estimate. They said fiscal deficit be kept at 4.5% of the GDP for the next fiscal. A sharper consolidation in the fiscal deficit could impact demand, they warned.
The CII has suggested the government to reduce excise duty on fuel to reduce overall inflation and boost disposable incomes, and a cut in income tax for personal income up to Rs 20 lakh per annum to trigger the virtuous cycle of consumption, higher growth and higher tax revenue.
The government may introduce consumption vouchers, targeted at low-income group, to stimulate demand for specified goods and services over a designated period. The vouchers could be designed to be spent on designated items (specific goods and services) and could be valid for a designated time (like 6-8 months), to ensure spending, said CII. “The beneficiary criteria can be defined as Jan-Dhan account holders who are not beneficiaries of other welfare schemes.
The industry has suggested debt targeting from FY27, with a glide path to bring the Central government’s debt to below 50% of GDP by FY31. This is likely to have a positive impact on India’s sovereign credit rating and interest rates, said Sanjiv Puri, president, CII.
PHDCCI’s President Hemant Jain emphasised the need to completely remove the inverted duty structure that currently exists in several industries, particularly in sectors such as cement, aluminium, steel, packaging material, paper and paperboard industry.
“The inverted duty structure leads to higher costs for domestic manufacturers, hindering their competitiveness in the global market. Eliminating these inefficiencies would go a long way in bolstering the manufacturing sector,” he said.
Industry body ASSOCHAM highlighted that despite the policy for collateral-free loans, MSMEs still face challenges in accessing credit. Banks often request personal property collateral and charge higher interest rates, hindering credit access. “Thus, it must be made mandatory for banks to disclose the number and amount of collateral-free loans granted periodically,” said Sanjay Nayar, president, ASSOCHAM.
Nayar recommended the upcoming Budget should provide an additional allocation or net to enhance credit flow to the MSMEs, much like the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) launched during Covid-19.
Post the meeting, FICCI Vice President Vijay Sankar said that the FM and her colleagues gave a very patient hearing to the industry today. “There were about 13 people from different industry chambers. There was some commonality of themes across some of the representations, basically the temporary slowdown faced due to dumping products especially by some of our neighbours like China due to the slowdown in their economy”.
FICCI has suggested the government to simplify compliance with respect to TDS, roll back simultaneous trigger of TDS and TCS provisions (Section 194Q and Section 206C(1H), dispense requirement to issue TDS certificate, and relax applicability of Section 206AB of the Income Tax Act on dividend payments to all non-residents.
FICCI has also asked for introduction of a new independent ‘dispute resolution forum’ for effective and time bound dispute resolution of appeals. “A dispute resolution forum adjudicated by independent experts will help address matters efficiently at the pre-assessment and post-assessment stages and hence bring down the overall number of disputes. This will also improve the trust factor between the revenue authority and taxpayers as well as enhance ease of doing business,” said the body.
Apart from Sitharaman, the meeting was attended by the secretary of DIPAM (department of iInvestment and public asset management), secretary of department of economic affairs and the chief economic adviser, among others.