Tax exemptions for the middle class, reduction in excise duties on petrol and diesel, and an increased focus on public capital expenditure (capex) emerged as key suggestions during Pre-Budget discussions held on Monday. Finance Minister Nirmala Sitharaman, along with top government officials, engaged with industry representatives in the fifth round of consultations for the Union Budget 2024-25.
The meeting emphasized employment generation, boosting consumption, and implementing factor market reforms to drive economic growth. Prominent industry bodies, including the Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce & Industry (Ficci), and Associated Chambers of Commerce and Industry of India (Assocham), shared proposals aimed at fostering economic resilience amidst global uncertainties.
Tax Relief for Middle Class and Businesses
Industry representatives advocated for increasing disposable income through tax exemptions for individuals earning up to ₹20 lakh annually. A reduction in excise duties on petrol and diesel was also proposed to alleviate the financial burden on consumers and businesses.
The chairman of CII highlighted the need to raise the minimum wage rate under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) from ₹267/day to ₹375/day, as suggested by the Expert Committee on Fixing National Minimum Wage.
Additionally, there were calls to rationalize tax deducted at source (TDS) and tax collected at source (TCS) rates into a simplified two or three-tier structure to reduce compliance burdens and avoid classification disputes.
Infrastructure and MSME Development
Industry bodies urged the government to grant infrastructure status to the hotel and tourism sector, a move that could attract foreign investment and reduce borrowing costs. This would also boost employment opportunities, particularly in rural and semi-urban areas.
Ficci proposed a 15% increase in public capex for FY26 over FY25, focusing on physical, social, and digital infrastructure to sustain growth momentum. Representatives also called for the development of integrated infrastructure townships for micro, small, and medium enterprises (MSMEs), complete with research centers, housing, schools, and training facilities.
Simplified Tax Compliance and Investment Reforms
The industry recommended extending presumptive taxation to emerging sectors like data centers and Cloud computing, enabling simplified tax compliance for MSMEs. They also suggested abolishing the securities transaction tax (STT) to encourage capital market investments.
Focus on Green Initiatives
The industry stressed the importance of an enabling policy framework to target resources toward green and transition areas, aligning with India’s ‘net zero’ goal by 2070.
Public Capex as a Growth Driver
Given the global economic headwinds, stakeholders emphasized the need for continued public investment in infrastructure. Assocham President proposed skill development initiatives, including the establishment of MSME universities, to boost entrepreneurship and job creation.
The suggestions outlined in the meeting reflect the industry's expectations for a balanced and inclusive Budget 2024-25, with a focus on tax reforms, infrastructure development, and policies that spur growth and economic stability.
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