Indian Inc demands tax relief for middle class and MSMEs

Indian Inc demands tax relief for middle class and MSMEs

Income tax relief to the middle class to boost consumption, reconsideration of the mandatory 45-day payment time limit for micro and small enterprises, restructuring of GST rates, measures to boost exports and simplifying IT imports are some of the ideas put forward by industry leaders to Finance Minister Nirmala Sitharaman at a pre-Budget consultation held on Thursday.

Ms Sitharaman also met financial sector representatives, including venture capital (VC) providers, who advocated allowing the country's pension and insurance funds to invest in alternative assets and expanding the angel tax exemption list to include registered foreign VC investors. The Venture and Alternative Capital Association of India also sought a review of the Competition Commission of India's definition of 'control', which covers private equity investors with minority stakes.

Assocham urged the government to increase the basic income tax exemption limit from ₹3 lakh to ₹5 lakh and said the standard deduction given to taxpayers should be doubled to ₹1 lakh to adjust for inflation. The industry body argued that such tax concessions would boost consumption without affecting the government's fiscal position.

While most industry leaders emphasised on helping micro, small and medium enterprises (MSMEs), the Bengal Chamber of Commerce (BCC) said changes in the Income Tax Act, which mandates payments to SMEs within 45 days, have made things difficult as a 60-90-day credit period is the industry norm. The chamber proposed aligning the IT law with the central GST Act, which does not allow payments to exceed 180 days, and expanding its scope to cover medium-sized firms.

The BCC also raised concerns about the “huge difficulty” involved in importing laptops, which now requires five approvals in addition to the import licence. Until India becomes self-sufficient in electronics, sourcing will remain dependent on imports and non-tariff barriers could lead to shortages and push up prices, it said, seeking a reconsideration of the matter.

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