PHDCCI urges government to focus on demand creation reforms in budget
New Delhi: PHD Chamber of Commerce and Industry has urged the government that demand rejuvenating reforms should be the major focus area of the forthcoming Union Budget 2020-21.
Demand creation reforms will push the broad based recovery of the economy and create an environment of enthusiasm to become a US $5 trillion economy, going forward, D K Aggarwal, president, PHDCCI said in a press statement covering the broad pre-budget expectation of the industry chamber. At this juncture, rationalisation of direct taxes and an income tax exemption upto the level of income of Rs 5 lakhs will be a great breakthrough to enhance the personal disposable income of the individuals and to increase the consumption demand in the economy, said Aggarwal.
With no personal income tax applicable upto the income of Rs 5 lakhs for the individuals, income tax slabs should be rationalised to 10 per cent for people earning upto Rs 10 lakhs per year, 20 per cent for those with incomes of over Rs 10 lakhs and upto Rs 20 lakhs, 30 per cent for income over Rs 20 lakhs and upto Rs 2 crore and 35 per cent for individuals earning more than Rs 2 crore, he said.
Increased expenditure of the government to enhance consumption demand along with implementation of Rs 102 lakh crore National Infrastructure Pipeline (NIP) has the potential to push economic growth trajectory to more than 8 per cent in the next three years, Aggarwal added.
Access to finance is a major roadblock being faced by the industries particularly by the MSMEs impacting their competitiveness and growth. To address the liquidity crunch in MSMEs, there is a need to set up a dedicated fund of Rs 25,000 crore or more with no collateral being asked for the MSMEs, PHDCCI has said.
Long term Capital Gains Tax on shares is suggested at 10 per cent for the holding period after one year, 5 per cent after two years and zero per cent after three years as when STT was levied it was in lieu of exempting long term capital gains tax.
Around 95 per cent of MSMEs are in Proprietorship/Partnerships business. They are not getting any relief from the recent cut in corporate tax rates. So at this juncture we suggest a uniform tax rate of 25 per cent to such businesses, going forward, Aggarwal said.
To kick-start the exports growth trajectory, the PHDCCI president suggested increase in export earnings by the exporters on the base of the previous year (year-on-year earnings) should be tax free.