As the pre-budget exercise for 2025-26 gathers steam, industry bodies on Thursday urged the government to further streamline tax administration by reducing the peak tax rate on partnerships/LLPs to 25%, lowering the tax on interest income from bank deposits and slashing the number of TDS rates to the bare minimum.
In their meeting with Revenue Secretary Sanjay Malhotra, they also sought an extension of the RoDTEP (Remission of Duties and Taxes on Exported Products) scheme till September 2025 for AA/EOU/SEZ units and a broadening of the Income-tax base through data analytics.
“Given the intrinsic strength of the economy and with growth aspirations of the people, this is an opportune time for India to design a blueprint and a template outlining the next phase of reforms,” said Sanjiv Puri, CII President and ITC Chairman.
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The suggestions come at a time when a committee formed by the government is re-drafting the Income Tax Act, 1961 to simplify it and possibly carry out some pending reforms.
The CII and PHDCCI have sought the Centre’s capital expenditure thrust should be continued in 2025-26 with over Rs 13 lakh crore outlay compared with Rs 11.11 lakh crore in FY25.
To help Indian industry become globally competitive, CII has suggested that except for a few products presently in the higher slab, the Centre should keep the customs duties low with the lowest or nil slab for inputs or raw materials, intermediates in the lower slab (2.5-5%) and final products in the standard slab. In addition, a scheme along the lines of RoDTEP should be extended for services exports to facilitate refund of embedded taxes.
PHD Chamber of Commerce and Industry (PHDCCI) President Hemant Jain said the corporate tax rates have been reduced to 25% including surcharge by the amendment made in September 2019. Thus, the peak rates must also be reduced for Partnership Individuals and Limited Liability Partnership firms at 25%, Jain said. Currently, partnership individuals and LLPs attract a peak income tax rate of 30% (excluding surcharge).
In its representation, industry body FICCI said simplification of the tax deducted at source (TDS) rate structure will considerably ease the compliance burden on the taxpayers and avoid litigation due to characterisation disputes.
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