HUBBALLI: The Karnatak Chamber of Commerce and Industry (KCCI) has urged the Union government to announce comprehensive policy and tax reforms in the Union Budget 2026–27 to accelerate industrial development, generate employment, and improve ease of doing business, particularly for micro, small and medium enterprises.
In a memorandum sent to Union Finance Minister Nirmala Sitharaman, the KCCI, as part of its infrastructure and regional development proposals, has called for the establishment of an Integrated Railway Coach Factory in Hubballi, fast-tracking of long-pending railway projects, and the creation of a Defence Industrial Park near Kittur in Belagavi district to promote balanced growth in North Karnataka.
On the income tax front, the memorandum recommends a significant increase in audit and presumptive taxation limits, a reduction of presumptive tax rates, and a cut in the partnership firm tax rate from 30 per cent to 25 per cent.
To ease cash-flow stress on MSMEs, it has sought the withdrawal or dilution of Section 43 B (h), alignment of PF and ESI provisions with Section 43 B, and relief from certain TDS obligations, including exemption of interest paid to NBFCs.
The KCCI has also proposed allowing key deductions such as Sections 80C and 80U and housing loan interest under the new tax regime, the introduction of a cash-ledger mechanism in income tax similar to GST, and tax exemption on capital gains used for education or medical expenses.
In the GST regime, the memorandum seeks higher exemption thresholds, expansion of the composition scheme limits for both goods and services, and a reduction of the composition tax rate for restaurants from 5 per cent to one per
cent. It has also called for a completely faceless GST refund system, protection of input tax credit where taxes have already been paid, and a GST Tribunal bench in Hubballi to serve taxpayers in North Karnataka.
Additional recommendations include a tax amnesty scheme for technical defaults, simplification of GST rules for joint development agreements, implementation of tax rate changes from
April 1, and a single-window application system for various regulatory renewals. Reintroduction of Dividend Distribution Tax (DDT) was suggested to reduce compliance related to foreign remittances and TDS filings.
To tackle unaccounted money, the KCCI has proposed prescribing a cash-holding limit and enhancing industry-specific training for tax officers. It also urged the government to better the target welfare expenditure using Aadhaar and rein in rising salary and pension costs.