Industry bodies have put forth key proposals for the upcoming Union Budget 2025-26 during a series of pre-budget interviews with Finance Minister Nirmala Sitharaman, including abolition of securities exchange tax (STT) and reduction in tax liability on fuel.
The PHD Chamber of Commerce and Industry (PHDCCI) has sought abolition of STT, saying the recent increase in long-term capital expenditure has led to the tax on recorded shares rising to 12.5%, bringing the value tax at par with other resource classes, Moneycontrol reported.
“The move will reduce the tax burden on investors and encourage more investments in the stock market, thereby boosting economic growth,” the industry body was quoted as saying.
STT collections stood at ₹40,114 crore between April 1 and December 17 of the current fiscal.
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The Confederation of Indian Industry (CII) has suggested reducing taxes on petrol and diesel, which are about 21% and 18% of their retail cost, agreeing with a PTI report. The CII argued that despite a 40% drop in global crude oil prices since May 2022, there has been no change in taxes, leading to inflationary pressures.
It suggested increasing the daily wage under MNREGA to ₹375 and the annual payment of PM-Kisan to ₹8,000, which would lead to additional expenditure of ₹42,000 crore and ₹20,000 crore, respectively. Meanwhile, Assocham supported increasing potential tax collections to departments such as MSME and cloud computing to ease compliance, agreeing with media reports. FICCI urged the government to increase capital expenditure (capex) by 15% in FY26 to maintain growth momentum amid global weaknesses. FICCI also stressed changes in revenue, revenue and revenue departments, proposing inter-state regulation stages like the GST committee to push changes in these areas. To ease tax compliance, FICCI recommended rationalizing various TDS/TCS rates into a less onerous layered structure and eliminating TDS/TCS on GST-related transactions. It also sought an independent discussion decision meeting for assessments to build citizen confidence and speed up decision processes. The Hardware and Computer Programs Business Development Chamber (ESC) pushed for changes in the Derivative Linked Incentive (DLI) scheme, including extending its duration to 2035 and providing assessment benefits for R&D-focused firms, PTI reported in detail. ESC official head Gurmeet Singh sought additional grants of $20 billion under the DLI scheme to meet the rising demand for R&D in rising quantum developments like AI and web products. The ESC likewise recommended a 10-year duty period on the sale of IP-driven products created through in-house R&D to encourage development and local innovation development. The Building Trade Advancement Committee (EEPC) proposed a “faceless” GST review framework to boost ease of doing business and suggested increasing amnesty schemes for exporters dealing with switch charge instrument liabilities. Finance Minister Sitharaman has been holding meetings with various stakeholders since December 6 to gather inputs for the budget. These discussions have discussed challenges of inflation amid concerns over industrial growth, country use and slowing GDP growth, which was 5.4% in the second quarter of FY 2024.
The Union Budget 2025-26 is planned to be presented on February 1.
