As the Union Budget 2025-26 approaches, the PHD Chamber of Commerce and Industry (PHDCCI) has proposed several reforms to bolster economic growth and ease business operations. As the Union Budget 2025-26 approaches, PHDCCI urges the government to adopt reforms aimed at tax simplification and bolstering MSME and manufacturing sectors. Here’s a detailed overview of their recommendations:
Tax Reforms
- Reduction in Tax Rates: PHDCCI has called for lower tax rates for individuals and Limited Liability Partnership (LLP) firms, aligning them with the 25% corporate tax rate.
- Presumptive Tax Scheme: The industry body suggests increasing the threshold for the presumptive tax scheme applicable to professionals.
- Abolition of Security Transaction Tax (STT): With long-term capital gains (LTCG) on shares now at parity with other assets, PHDCCI recommends abolishing STT to encourage investments.
Expansion of the PLI Scheme
- The Production Linked Incentive (PLI) scheme, currently covering 14 sectors, should be expanded to include:
- Medicinal plants
- Handicrafts
- Leather and footwear
- Gems and Jewelry
- The space sector
- This expansion aims to enhance manufacturing, raising its GDP contribution from 16% to 25% by 2030.
MSME Sector Support
- Revised Classification Norms for NPAs: PHDCCI recommends extending the overdue period for MSME loans to classify them as Non-Performing Assets (NPAs) from 90 to 180 days.
- Interest Equalisation Scheme: Continued support for pre-and post-shipment export credit for MSME services exports.
- Inclusion of Medium Enterprises: Medium enterprises should be allowed to access MSE Facilitation Councils to resolve payment delays. Currently, only Micro and Small Enterprises are eligible.
- Restructuring Scheme: PHDCCI suggests a restructuring scheme approved by the Reserve Bank of India (RBI) to aid MSMEs facing financial stress.
Capital Expenditure and Budget Expansion
- Increase in Capex: The industry body proposes raising capital expenditure from ₹11.11 lakh crore to ₹13 lakh crore.
- Budget Size Growth: It recommends increasing the total budget size from ₹48.2 lakh crore to over ₹51 lakh crore to support development initiatives.
Faceless Appeals
- PHDCCI suggests introducing a statutory period for faceless appeals to ensure faster resolution of tax disputes.
Support for Manufacturing and Exports
- Encouraging manufacturing as a core sector to drive economic growth.
- Expanding interest equalization benefits to support MSME exports further and enhance India’s global competitive edge.
MSE Facilitation Councils
- Expansion of the scope of MSE Facilitation Councils to cover delayed payments to medium enterprises, ensuring quicker resolution of disputes.
Conclusion
PHDCCI’s recommendations reflect the need for progressive reforms to boost economic activity, enhance business efficiency, and support sectors like MSMEs and manufacturing. These measures could help India achieve sustained growth and further strengthen its position in the global economy.