As finance ministry is gearing up for the next Union Budget, industry chambers like CII, ASSOCHAM, PHDCCI, FICCI called for a more predictable and business-friendly direct tax regime with more focus on faster dispute resolution and employment boost.
Some of their common suggestions to the Revenue Department include lowering tax rates for small firms, reviving incentives for manufacturing and research, and cutting delays in tax administration. The industry bodies urged the government to restore the 15% corporate tax rate that was earlier available under Section 115BAB for new manufacturing companies. The concessional rate, it said, would attract both domestic and foreign investors, boost job creation, and help India consolidate its position as a global manufacturing hub. “This will enable India to remain attractive for making fresh capital investment, provide boost to domestic economy and also encourage exports,” suggested ASSOCHAM.
The industry bodies also proposed to extend tax neutrality to all forms of business restructurings—conversions, mergers, and demergers—beyond corporates. Such flexibility will let firms to function efficiently without triggering tax liabilities, provided ownership continuity and other basic conditions are met. Similar relief should also apply to Indian shareholders of foreign entities involved in mergers. Also to promote setting up of new manufacturing units in India, chambers suggested to reintroduce section 115BAB of the Income Tax Act, wherein a concessional rate of corporate tax of 15 percent plus surcharge was introduced for new manufacturing units complying with certain conditions. And also to spur innovation, chambers have sought the permanent reinstatement of the 150% weighted deduction on research and development spending under Section 35 to make Indian firms globally competitive.
Not only for corporate and businesses, but chambers made proposals to also ensure better flexibility of individuals’ income tax. To promote employment, chambers have proposed raising the salary cap for new employees eligible under the hiring-based deduction from ₹25,000 to ₹50,000 a month. They also want contractual staff covered under the provision and the deduction period reduced to two years from the existing three.
Industry groups have asked the government to exempt farmers and farmer producer organisations from the 0.1% TDS currently levied on e-commerce participants.
With corporates and partnership firms are taxed at 15–25% and 30%, respectively, PHDCCI has proposed a tiered rate structure—20% for income up to `30 lakh, 25% for `30–50 lakh, and 30% above `50 lakh. Lower rates, it said, would encourage voluntary compliance and ease the burden on small service firms that lack corporate benefits such as limited liability.
Several chambers have called for procedural reforms. They want buybacks to be taxed as capital gains for shareholders with TDS on distributions, longer timelines—by six to nine months—for filing revised or belated returns, and a 60-day deadline for the tax department to issue NOCs during mergers.
