As the pre-budget exercise for 2025-26 gathers steam, industry bodies on Thursday urged the government to further streamline tax administration by reducing the peak tax rate on partnerships/LLPs to 25%, lowering the tax on interest income from bank deposits and slashing the number of TDS rates to the bare minimum.
In their meeting with Revenue Secretary Sanjay Malhotra, they also sought an extension of the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme till September 2025 for AA/EOU/SEZ units and a broadening of the Income-tax base through data analytics.
“Given the intrinsic strength of the economy and with growth aspirations of the people, this is an opportune time for India to design a blueprint and a template outlining the next phase of reforms,” said Sanjiv Puri, CII President and ITC Chairman.
Govt invites applications for RBI deputy governor post
Enhanced Enforcement on OIDAR Services
Driven by intellectual fervour, Debroy always spoke his mind
Unsecured stress: Interest rates should come down
The suggestions come at a time when a committee formed by the government is re-drafting the Income Tax Act, 1961 to simplify it and possibly carry out some pending reforms.
The CII and PHDCCI have sought the Centre’s capital expenditure thrust should be continued in 2025-26 with over Rs 13 lakh crore outlay compared with Rs 11.11 lakh crore in FY25.
To help Indian industry become globally competitive, CII has suggested that except for a few products presently in the higher slab, the Centre should keep the customs duties low with the lowest or nil slab for inputs or raw materials, intermediates in the lower slab (2.5-5%) and final products in the standard slab. In addition, a scheme along the lines of RoDTEP should be extended for services exports to facilitate refund of embedded taxes.
PHD Chamber of Commerce and Industry (PHDCCI) President Hemant Jain said the corporate tax rates have been reduced to 25% including surcharge by the amendment made in September 2019. Thus, the peak rates must also be reduced for Partnership Individuals and Limited Liability Partnership firms at 25%, Jain said. Currently, partnership individuals and LLPs attract a peak income tax rate of 30% (excluding surcharge).
In its representation, industry body FICCI said simplification of the tax deducted at source (TDS) rate structure will considerably ease the compliance burden on the taxpayers and avoid litigation due to characterisation disputes.
Going forward, it is suggested that there be only three rate structures for TDS payments – TDS on salary at slab rate, TDS on lotteries/online games etc at maximum marginal rate and two standard rates for TDS for different categories.
Currently, there are 32 sections (including the new TDS on remuneration paid to partners of firms) dealing with 37 different types of payments to residents where the TDS rates vary from 0.1% to 30%. CII said the TDS rates should be few and suggested normal slab rates for salary, 30% for lotteries and horse race winnings, continuing all TDS provisions that attract less than 5% rate and all other payments should be kept at 2%-4%.
FICCI suggested a one-time settlement scheme under Customs to clear past dues will help industry to reduce the baggage of litigation. It suggested that the government may provide a complete waiver of interest and penalty to the importers against all the disputes related to the Customs Act.
To incentivize deposit growth and promote savings in the economy, CII said the government may consider taxing interest income on bank deposits at a lower rate for all income tax slabs, to bring interest income at a comparable tax rate to other instruments such as Mutual Funds and Equities. Long-Term Capital Gains (LTCG) on shares and equity-oriented mutual funds in India are taxed at a 12.5% rate (plus surcharge and cess) if they reach Rs 1.25 lakh in a fiscal year. CII also suggested reducing the lock-in period of bank deposits for eligibility for preferential tax treatment from the current five years to three years.
From: financialexpress
Financial News
