New Delhi [India], January 25 (ANI): The Federation of Indian Chambers of Commerce and Industry (FICCI) has presented a set of comprehensive recommendations ahead of the Interim Union Budget for 2024-25, outlining a strategic roadmap to fortify India’s economic foundation.
The proposals span a spectrum of sectors, ranging from public investments to support for micro, small, and medium-sized enterprises (MSMEs), innovation, taxation, and the burgeoning start-up ecosystem.
At the core of FICCI’s recommendations is a fervent call to sustain and intensify the thrust on investments.
Building on the encouraging data regarding capital formation and the increased investment-to-GDP ratio, FICCI emphasizes the need for continued public capital expenditure, particularly in physical, social, and digital infrastructure.
The organization contends that India stands at a crucial juncture, and in light of global uncertainties, the government should persist with significant investments in the forthcoming budget.
Furthermore, FICCI proposes the creation of an ‘Indian Taxonomy’ for green finance. The suggestion stems from the belief that a well-defined standardized taxonomy, comparable to global frameworks, is essential for evaluating exposure to sustainable versus non-sustainable activities.
This approach, FICCI argues, would enhance transparency in the financial sector, compelling institutions to set sustainability targets aligned with national and global goals.
In the wake of current global developments and the world exploring alternatives to China, FICCI recommends positioning India as the next global manufacturing hub.
The Production Linked Incentive (PLI) schemes have proven successful, and FICCI suggests extending the concessional tax regime for manufacturing operations for at least five years to provide stability and certainty for potential investors.
This move is anticipated to attract large investments from global manufacturing companies, bolstering India’s competitive edge.
Recognizing innovation as a cornerstone for economic growth, FICCI underlines the importance of supporting research and development (R&D).
The organization proposes refinements to the existing patent box regime, extending concessional tax rates, and introducing incentives for new R&D companies.
These recommendations aim to encourage innovation and ensure that companies investing in R&D are adequately rewarded.
Additionally, FICCI suggests extending the concessional tax rate of 15 per cent to new R&D companies setting up substantial facilities within the next five years, further promoting industrial growth.
In a bid to support the backbone of India’s economy, the MSME sector, FICCI presents a series of recommendations.
Firstly, the organization proposes revising the qualifying criteria for mandatory registration on the Trade Receivables Discounting System (TReDS) platform.
By making registration mandatory for all companies with a turnover exceeding Rs 250 crore, FICCI aims to broaden the platform’s reach, providing easier access to funds for MSMEs.
Leveraging the Account Aggregator framework for MSME lending is another key recommendation. FICCI argues that expanding the scope to include joint and corporate accounts would significantly benefit the MSME segment.
Moreover, the organization advocates for changing the NPA classification norms for MSMEs, extending the limit for classifying overdue payments from 90 to 180 days.
This extension, FICCI contends, would prevent the diversion of working capital towards loan repayments, preserving the normal business operations of MSMEs.
FICCI underscores the need to simplify compliance with respect to Tax Deducted at Source (TDS). The existing structure, with various provisions for different categories of payments, has led to categorization and interpretation disputes. To enhance the ease of doing business, FICCI recommends a roadmap for rationalizing the TDS rate structure, suggesting three categories and introducing a “negative list” of payments exempt from TDS.
This streamlined approach aims to reduce compliance burdens on taxpayers and mitigate disputes.
Drawing attention to the issue of double taxation in buy-back transactions conducted through the ‘open market through stock exchange’ method, FICCI proposes exempting Buyback Distribution Tax (BBT) for listed shares under this method.
This move aims to prevent double taxation on the same transaction, aligning taxation with the unique nature of these buy-backs.
FICCI envisions collaborative efforts between the banking industry and regulatory bodies to accelerate the creation of digital securities, particularly for physical collateral such as land and vehicles.
By digitizing these assets, the verification and lien-marking processes would become more efficient, fostering credit growth. The Account Aggregator framework could also be leveraged to expedite the adoption of information collateral, further increasing credit penetration.
Recognizing the pivotal role of start-ups in fostering innovation and economic growth, FICCI recommends treating listed and unlisted equities at par for computing long-term capital gains (LTCG).
This parity would make start-up and unlisted equity investments more attractive for both domestic and international investors.
Additionally, FICCI advocates for extending the benefit of tax deferral on Employee Stock Ownership Plan (ESOP) perquisites to all employees, irrespective of whether their companies qualify under section 80IAC.
In a bid to enhance dispute resolution mechanisms, FICCI proposes the creation of an independent forum comprising retired judges, professionals, or experts.
This forum would focus on disputes at the assessment or post-assessment levels. The recommendations outline a structured approach, including strict timelines, limited adjournments, and draft order reviews, to ensure a fair and expedited resolution.
This initiative aims to instill confidence in taxpayers, encouraging settlements and reducing the burden of litigation.
In conclusion, FICCI’s budget recommendations are comprehensive, addressing diverse facets of India’s economic landscape.
The proposals align with the current global economic scenario and strive to fortify India’s position as a key player in the international arena.
As the country awaits the unveiling of the Interim Union Budget, FICCI’s recommendations reflect a forward-looking vision for economic resilience, innovation, and sustained growth. (ANI)
