New Delhi, Dec 30 A simplified tax structure can reduce compliance costs and increase disposable income while boosting consumer spending, PHD Chamber of Commerce and Industry (PHDCCI) President Hemant Jain said on Monday.
This increased demand encourages business expansion, driving economic growth. Additionally, the reduction in tax burdens can help mitigate inflationary pressures too, Jain said during the industry interaction with Finance Minister Nirmala Sitharaman here.
PHDCCI is expecting a significant increase in the size of the Union Budget from Rs 48.2 lakh crore in 2024-25 to over Rs 51 lakh crore for 2025-26.
The suggestions focused on rationalising the tax structure, bolstering the manufacturing sector, and creating an enabling environment for micro, small and medium Enterprises (MSMEs) to thrive along with a significant reduction in costs of doing business.
PHDCCI suggested reducing tax rates for individuals and Limited Liability Partnership (LLP) firms to 25 per cent as this reduction would not only ease the financial burden on businesses and individuals, but would also stimulate investment and economic activity across sectors.
Jain emphasised the need to completely remove the inverted duty structure that currently exists in several industries, particularly in sectors such as cement, aluminium, steel, and the packaging material, paper, and paperboard industry.
"The inverted duty structure leads to higher costs for domestic manufacturers, hindering their competitiveness in the global market. Eliminating these inefficiencies would go a long way in bolstering the manufacturing sector," he noted.
The industry body further pointed out that the ease of doing business in India needs to be further improved and percolated at the ground level. This includes reducing the cost of doing business, particularly in terms of capital, power, logistics, land, and compliance costs.
According to the PHDCCI, simplifying procedures and cutting down on regulatory burdens would make it easier for businesses to thrive and would encourage both domestic and foreign investments in India.
Jain highlighted the need for the government to enhance the manufacturing sector, increase infrastructure investment, and promote innovation.
The manufacturing sector in the country currently contributes around 16 per cent to the GDP, and "we should aim to increase this share to 25 per cent by 2030", he added.
PHDCCI also suggested special policy initiatives aimed at increasing female participation in the workforce. India’s female labour force participation rate currently stands at just 32 per cent.
To ensure inclusive growth, PHDCCI called for targeted measures to boost the participation of women in the labour market, thereby enhancing overall economic productivity.
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