The PHD Chamber of Commerce and Industry has suggested the government to provide full income tax exemption on income below Rs 5 lakhs. In its pre-budget memorandum to the government, the industry body has also asked the government to reduce the Dividend Distribution Tax to 15 percent and fix Long term Capital Gains (LTCG) tax on shares at 0 percent after 3 years. PHD Chamber President D K Aggarwal requested the government to implement the new income tax slab rates suggested by the Task Force constituted by the Government of India on New Direct Tax Legislation. Also, tax on income below Rs 5 lakhs should be fully exempted from income tax to put more money in the hands of the people, Aggarwal said.
The PHD Chamber president suggested that the effective rate of Dividend Distribution Tax may be brought down from the current level of more than 20.55% to 15% as on one income there is triple taxation. The industry body has suggested the Long term Capital Gains Tax on shares be set at 10 percent for the holding period after one year, 5 percent after two years and zero percent after 3 years as when STT was levied, it was in lieu of exempting long term capital gains tax.
Allow Commodities Transaction Tax
- Aggarwal said that Commodities Transaction Tax (CTT) should be allowed as Non- Refundable TAX paid upfront or Rebate under Chapter VIII like section 88 E instead of Expense. This will help in increasing the volumes and liquidity on Indian Exchanges and there will be no loss to the revenue also with an increase in volumes.
- Reduction in Tax on MSME firms working as Proprietorship/Partnerships is suggested as a vast majority of MSMEs are either sole proprietorship or partnerships. Hence, taxes should come down on these types of businesses, going forward. The maximum tax slab for MSME firms working as Proprietorship/Partnerships firms should be brought down to 25%, said Aggarwal.
- The PHD Chamber has suggested the government set up a dedicated fund of Rs 25,000 crore or more with no collateral being asked for the MSMEs on the lines of fund for stalled housing projects. This would address the liquidity crunch faced by MSMEs in a big way.
The PHD Chamber has suggested that the restriction imposed on investment of sale proceed on acquiring two residential houses should be removed. The industry body has also suggested for broadening scope to exempt capital gain tax if the sale proceeds is invested in creating housing stock without any limitation of number of units both for Individuals, HUF, Corporates and others To incentivize Rental Housing for meeting Housing for All commitment by 2022, 10 year tax holiday be given to real estate developers on profits earned from rental housing as it will revive investment and boost a slowing economy, said Aggarwal. Also, the deduction of interest u/s 24 should be allowed without any condition to encourage rental housing, said Aggarwal.
Relief for real estate
- Entities engaged in real estate business should be exempted from the burden of tax on the notional rental income because they are in any case subjected to levies at the time of sale or the period of 1 year should be extended to 5 years before such a provision begins to operate.
- The presumptive tax turn-over limit under Section 44AD should be increased to Rs. 5 crores for business and under Section 44ADA to Rs.1 crore for professionals to help conserve resources of taxpayers and officers, ease of doing business and compliance.
- Tax benefits under Section 72A in respect of amalgamation or demerger should now be extended to businesses in other new sectors growing at a rapid pace such as financial services, entertainment/sports, information technology (IT) and IT-enabled services.
Input tax credit under GST
The Government should allow input tax credit under GST laws to promote “Make in India” and costs competitiveness for Domestic Manufacturers. For doubling farmers’ income, a properly designed market support scheme for agricultural produce and dismantling of barriers to markets for farmers must be pursued. APMC should be dismantled and e-NAM should become the vehicle for farmers’ produce, said Dr. Aggarwal. Provide a clear roadmap on the spending of Rs 100 lakh crore for building strong physical infrastructure in the country.