New Delhi: Steps should be taken in the upcoming Union Budget to ensure hassle-free credit availability to industry, particularly for MSMEs, and reduce the costs of doing business, said Pradeep Multani, President, PHD Chamber of Commerce and Industry.
In an interview with F10 News, 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.
Multani said that the union budget 2022-23 is being presented at a very crucial juncture when the Indian economy is recovering from the daunting impact of the COVID-19 pandemic and expectations of a positive growth trajectory is strengthening on the back of a string of bold economic reforms announced by the Government since April 2020.
PHD Chamber President suggested for extension in the timeline of the Emergency Credit Line Guarantee Scheme (ECLGS) for another year till 31st March 2023.
On the taxation front, 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.
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 115BAB the time limit allowed to start manufacturing by a new unit may be extended by 31st March 2025.”
To give great momentum to exports, PHD Chamber suggested that export income should be made tax-free for MSMEs for 3 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.
Multani 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.
On Health Infrastructure Multani said that like last year government enhanced health expenditure by 137 per cent, we suggest the continued focus on the expenditure on health infrastructure as new variants of Coronavirus are hitting the country again and again.
Talking about the Direct Taxes 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. In a nutshell, the Budget should be vibrant and reform-oriented with a focus on refueling the consumption demand; enhancing private investments, and creating avenues for employment creation.