Budget 2024 expectations: Need to improve India’s competitiveness as a global manufacturing hub, says FICCI
The Federation of Indian Chambers of Commerce and Industry (FICCI), an industry body, has outlined its expectations from the Centre in the upcoming Budget, emphasising a host of critical areas for economic development.
As the country awaits Finance Minister Nirmala Sitharaman’s Interim Budget for 2024-25, expectations are rife that the annual event may spell good news for India Inc, the economy as well as the common man. The Federation of Indian Chambers of Commerce and Industry (FICCI), an industry body, has outlined its expectations from the Centre in the upcoming Budget, emphasising a host of critical areas for economic development.
Here are 10 things that the trade body has listed in its expectations ahead of the annual event:
1. Sustaining investment momentum
FICCI urges the government to maintain its focus on investments, particularly in public capital expenditure for physical, social, and digital infrastructure. Notably, the capital expenditure outlay in the previous Union Budget saw a substantial increase of 37.4 percent to Rs 10 lakh crore.
While emphasising the need for a continued thrust on public capex, considering global developments and challenges, FICCI has called for establishing a national taxonomy for green finance to enhance transparency in sustainable financing.
2. Enhancing India's manufacturing competitiveness
FICCI recommends extending the concessional tax regime for manufacturing operations for at least five years.
“Many global investors are today considering investment in India and extending such concessional tax regime for five years will ensure stability and certainty, thus bolstering confidence of investors to set up manufacturing units in India,” FICCI said.
3. Prioritising innovation and R&D
Recognising the pivotal role of innovation in economic growth, FICCI suggests rationalising and expanding the existing patent box regime. Its recommendations include extending concessional tax benefits to the sale of patented products manufactured in India and relaxing conditions related to joint patentees. FICCI also proposes extending the concessional tax rate to new R&D companies over the next five years to encourage investment in innovation.
4. Support for MSMEs
FICCI calls for revisions in the qualifying criteria for mandatory registration on the TReDS platform, recommending that all companies with a turnover exceeding Rs. 250 crore should be mandated to register. Additionally, leveraging the Account Aggregator framework for MSME lending and revising NPA classification norms for MSMEs are suggested measures to enhance liquidity and financial support for the sector.
5. Simplifying TDS compliance
To ease the compliance burden, FICCI proposes a rationalization of the TDS rate structure, suggesting only three rate structures for TDS payments. The introduction of a "negative list" exempting certain payments from TDS is also recommended to reduce disputes related to categorization and interpretation.
6. Addressing double taxation on buybacks
FICCI advocates for the removal of double taxation on buy-back through open market purchases by exempting Buyback Distribution Tax (BBT) in cases of listed shares bought back through the 'open market through stock exchange' method. The proposal aims to avoid redundant taxation and promote a conducive environment for shareholders.
7. Tokenising collateral for credit growth
FICCI proposes collaboration between the banking industry and regulatory bodies to accelerate the creation of digital securities and tokenize collateral. This initiative is expected to streamline the verification process and enhance credit penetration through the use of blockchain-based, asset-specific utilities.
8. Supporting start-up ecosystem
FICCI advocates for the parity of long-term capital gains (LTCG) tax on listed and unlisted equities to boost investment in start-ups. Aligning the treatment of listed and unlisted equities will attract both domestic and international investors to the evolving start-up ecosystem.
9. Extending deferral of taxation on ESOP perquisite
FICCI recommends extending the benefit of deferral of tax on ESOP perquisites to all employees, not limited to those in section 80IAC qualifying start-ups. The proposal aims to provide relief to employees and increase flexibility in managing tax liabilities related to ESOPs.
10. Establishing an independent dispute resolution forum
To expedite dispute resolution, FICCI suggests the creation of an independent forum comprising retired judges, professionals, or experts. This forum would address disputes at the assessment or post-assessment level, providing a time-bound resolution and enhancing confidence among taxpayers.
Additionally, FICCI proposes expanding the scope of the Dispute Resolution Committee to include mid-sized and large-sized taxpayers.
As the government prepares to present the Interim Union Budget, FICCI's recommendations underscore the industry's expectations for strategic measures to foster economic growth and resilience in the evolving global landscape.
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