Budget 2024-25: Rationalise taxes, enhance public capex, says FICCI

The Federation of Indian Chambers of Commerce and Industry (FICCI) has sought further rationalisation of taxes and enhanced public capital expenditure from Union Budget 2024-25.

In a pre-budget consultation meeting with the finance minister, FICCI wanted the capital expenditure outlay for FY25 to be increased by 25% over RE for FY24 to ₹11.8 lakh crore. The industry body asked the government to lay thrust on public capex on physical, social and digital infrastructure.

On the taxation front, FICCI called for a roadmap for rationalisation of tax deducted at source (TDS) rate structure. It has proposed three rate structures for TDS payments – TDS on salary at slab rate, TDS on lotteries or online games, etc., at maximum marginal rate and two standard rates for TDS for different categories.

The industry body also wanted simplification of the capital gains tax regime across asset classes like equity investments, debt instruments and others. It wanted the holding period for such assets to turn long-term with indexation benefit eligibility. Long-term and short-term capital gains tax rates and short-term capital gains tax rates should be the same for residents and non-residents, it suggests. The introduction of a new independent Dispute Resolution Forum, and rationalisation of custom duty rates where duty inversions exist for products such as textiles, aluminium, chemicals, etc., were also proposed.

The industry body sought government support for MSMEs to meet their liquidity and finance requirements. It called for the development of a blockchain-based single portal for all trade-related compliances (linking multiple portals from DGFT, Customs, multiple PGAs, shipping lines, logistics providers, banks, etc.) to help exports. The implementation of electronic exchange of customs declarations, electronic exchange of certificates of origin, electronic certificates related to SPS, etc., were some of the ease-of-doing measures proposed to help foreign trade.

Prioritisation of innovation and research and development was another key suggestion from FICCI. The industry body wanted the government to operationalise the ₹1 lakh crore corpus announced in the Interim Union Budget for research and innovation in sunrise sectors. The establishment of innovation clusters co-locating private sector, academia, investors, start-ups and government-funded R&D institutions for critical areas (renewable energy, water, smart mobility, new materials, life sciences) was another proposal.

Suggestions to strengthen the agri-ecosystem and boost agri-productivity, boost tourism, promote sustainability and address food inflation were also part of the industry body’s pre-budget recommendations.