Full Budget 2024: The full Budget 2024 will be tabled next month. On Wednesday, Union Minister for Finance & Corporate Affairs Nirmala Sitharaman chaired the first Pre-Budget consultation meeting with leading economists. The meeting was attended by MoS for Finance Pankaj Chaudhary, the Finance Secretary, and the Secretaries of the Departments of Economic Affairs, Revenue, Financial Services, and Corporate Affairs, as well as the Chief Economic Adviser to the Government of India.
India’s industry lobby groups have already presented their wishlists to the Finance Ministry officials. Confederation of Indian Industry (CII), PHD Chamber of Commerce and Industry (PHDCCI), and Federation of Indian Chambers of Commerce & Industry (FICCI) held separate meetings with Revenue Secretary Sanjay Malhotra on Tuesday and shared their suggestions for the upcoming Budget 2024.
Capital gains tax
FICCI suggested simplifying the capital gains tax with two or three categories based on asset types, holding periods, and indexation benefits for long-term status. The industry body said the asset categorising should be done in three groups: equity instruments, debt, and other assets, with specific rates set for both long-term and short-term gains. FICCI also recommends uniform tax rates for residents and non-residents, eliminating the current distinctions.
“The entire thrust is on simplification,” said Dinesh Kanabar, mentor at FICCI Tax Committee, highlighting that currently there are multiple rates of withholding taxes and high tax is collected at source.
CII labeled India’s current capital gains tax system as intricate. It proposed maintaining the holding period at 12 months for financial assets to be considered long-term, and at 36 months for other assets.
CII said long-term capital gains tax rate should be fixed at 10 per cent for financial assets and 20 per cent for assets like immovable property.
For short-term, it suggested that financial assets be taxed at 15 per cent and other assets at the applicable rates. The body also suggested that corporate tax rates be maintained at the current levels to provide “tax certainty”.
Tax relief for middle class
CII President Sanjiv Puri put across tax relief for incomes up to Rs 20 lakh and lower excise duty on petrol and diesel. Despite a 40% drop in Brent crude prices, pump prices in Delhi only decreased by Rs 1.8 per litre.
“To boost consumption demand in the short term, steps such as providing a marginal relief in income tax at the lower end of the spectrum with taxable income up to Rs 20 lakhs; reduction in excise duties on Petrol and Diesel: upward revision of minimum wages of MNREGA; raising DBT amount under PM Kisan were suggested by CII,” said Sanjiv Puri, president of CII.
PHDCCI also proposed increasing the income tax slab to 30% for earnings above Rs 40 lakh. For incomes below this, they suggested maintaining tax rates between 20 and 25%.
“The middle class is currently taxed at a rate of 30%, leaving them with little disposable income for savings and other needs. We suggested that the 30% tax slab should apply only to incomes above Rs 40 lakh,” Mukul Bagla, chair of the direct taxes committee at PHDCCI, told news agency ANI.
Under the new tax system, individuals earning over Rs 15 lakh face a 30% tax rate, previously applied to incomes exceeding Rs 10 lakh in the old system.
Indirect taxes
For indirect taxes, CII said decriminalisation of some offences under GST and that it should be brought under a three-tax structure.
“The 12 per cent slab could be merged with the 18 per cent slab, to be around 14 or 15 per cent,” it said.
“A negative list of areas may be provided, which may specify cases such as interpretational issues, clerical errors, etc. where prosecution provisions should not be made applicable,” it added.
PHDCCI said they have also asked for introduction of faceless assessment in indirect taxation.
“We also suggested that on the lines of income tax, we should be given a faceless assessment scheme (for indirect tax) also,” said Ashok Kumar Batra, chair of the Indirect Taxes Committee at PHDCCI.
“In case it is not possible for you to introduce faceless assessment, at least virtual hearings should be made mandatory wherever they are being requested for,” Batra said.
Pranav Satya, chair of the FICCI Tax Committee, said that the body had earlier put forth its suggestion on GST.
“As a part of the FICCI agenda, we have talked about initialisation of GST 2.0 building on the success of GST implementation, which has achieved both its objectives of removing barriers to trade as well as of a greater formalisation of the economy,” he told the revenue secretary.