Steps should be taken in the upcoming union budget to ensure hassle-free credit availability to industry, particularly for micro, small and medium enterprises (MSMEs) and reduce the costs of doing business, said Pradeep Multani, president, PHD chamber of commerce and industry (PHDCCI).
Mr Multani suggested that the reforms should be undertaken to bolster the MSME sector given its significant contribution to the economic and social development of the country.
The industry body’s president suggested extension in the timeline of the emergency credit line guarantee scheme (ECLGS) for another year till March 31, 2023.
On the taxation front, Mr Multani suggested a reduction in tax on MSME firms working as Proprietorship/ Partnerships as it will benefit the entire MSME sector. For such businesses, it is suggested that the maximum tax slab be brought down to 25 per cent, he said.
Mr Multani said that for the new units, the effective rate of tax is around 17 per cent. “So we suggest enabling the entities to take benefit of Section 115 BAB the time limit allowed to start manufacturing by a new unit may be extended by March 31, 2025.”
To give great momentum to exports, PHD chamber suggested that export income should be made tax-free for MSMEs for three years and income of large enterprises from incremental exports (Y-o-Y) be made tax-free. This will help in partly compensating the additional cost of logistics and other bottlenecks which Indian exporters face.
He further said that applicable basic custom duty (BCD) needs to be reduced by 50 per cent on raw materials for manufacturers, increase the public investments in agriculture infrastructure from the current level of 6 per cent of the total gross capital formation to at least 10 per cent in the next 3 years with an enhancement of 1.5 percentage points every year. This will also reduce the agri-wastages from more than 25 per cent to less than 10 per cent in the coming times.
Talking about the direct taxes Mr Multani suggested increasing the tax base by encouraging people to pay the taxes with lucrative tax-paying benefits such as providing a threshold of pension (after their retirement above the age of 60 years) for those who pay taxes continuously and honestly. This will increase the tax base in the country.