FICCI Predicts Major Tax Reforms in Upcoming Union Budget to Boost Economy

The Federation of Indian Chambers of Commerce & Industry (FICCI) predicts the government will enact significant tax reforms in the forthcoming Union Budget, focusing on fostering economic growth. This anticipation arises from a survey conducted by FICCI, highlighting expected changes such as GST rate simplification, enhanced state finances, and a revamped capital gains tax system.

On the fiscal management front, FICCI praised the government's skillful handling of fiscal policies and anticipates continued prudence to maintain macroeconomic stability. Experts in the FICCI survey suggested that robust tax collections and the Reserve Bank of India's dividend transfer could provide fiscal space to boost spending on social sector schemes, particularly to support rural communities. Stable subsidy estimates reflect a targeted benefit delivery approach.

Capital expenditure targets might see an increase, though substantial deviations from the Rs 11.1 trillion mark for FY25 are unlikely due to elections and monsoons affecting early spending. Survey participants expressed hopes for a simplified capital gains tax regime with broader asset categories and clear guidelines on long-term gains, indexation benefits, and tax rates, without differentiating between residents and non-residents.

Additionally, employment generation and skill development measures might be introduced, including employment-linked incentives and increased investment in labor skills, with a focus on enhancing female workforce participation. FICCI also forecasts improvements in infrastructure, including enhanced food processing and storage infrastructure to reduce post-harvest losses and add value to agricultural produce.

For Micro, Small, and Medium Enterprises (MSMEs), there might be supportive measures like extending the non-performing assets classification period from 90 days to 180 days, providing essential financial relief. The body also anticipates continued encouragement for innovation, with further details and modalities expected for the R&D and innovation fund announced in the Interim Budget.

(With inputs from agencies.)