In its pre-Budget recommendations, industry body ASSOCHAM has urged the government to increase the exemption limit for income tax to at least Rs 5 lakh so that more disposable income is left in the hands of consumers and the economy gets a consumption boost and further leg-up in the recovery. Without accounting for rebates, the current exemption limit is Rs 2.5 lakh for the assesses.
Talking to reporters, ASSOCHAM President Sumant Sinha said buoyancy in both the direct and indirect taxes should give enough elbow room to the government for raising the income tax exemption limit. The government must respond to the proactive steps other nations are doing to support the production of green hydrogen as India strives to become a major energy producer.
Currently, income tax is exempt on a total income of up to Rs 2.50 lakh a year. However, the income can be exempt on income up to Rs 5 lakh if the total income in a year is up to Rs 5 lakh. In case the income is above Rs 5 lakh, income tax on the entire amount (except the exemption limit of Rs 2.50 lakh) is levied.
Attention should be given to sustainable and green industries to promote job growth and a green economy. Economy security bigger than manufacturing security, he said. Advancing the green economy, achieving energy independence, making investments in green industries, and reducing the use of fossil fuels are all steps for Atmanirbharta.
“Boosting consumption by leaving more money in the hands of the consumers, is a low hanging fruit for a further recovery in economic growth,” said Deepak Sood, secretary-general of ASSOCHAM.
The chamber said that along with consumption, the other path to sustainable growth would be further promoting investment. In this direction, the ASSOCHAM said that 15 per cent corporate tax rate for new investments in manufacturing can be extended to all sectors, including services.
Suggesting another relief measure, it said the interest for late payment of the GST should be reduced to 12 per cent from 18 per cent. ”The penal interest rate of 18 per cent is too high, particularly for the MSMEs .”
Measures like the production-linked incentive (PLI) scheme, with an outlay of around Rs 2-lakh crore for 13 sectors, were introduced in 2021. PLI has done much to boost domestic manufacturing, investment as well as job creation. It is, therefore, advised that the government should continue to focus on it. Reports suggest proposals are in the works to extend the Rs 35,000-crore PLI scheme to various sectors.
While exporters are asking for credit at affordable rates, MSMEs are asking for the restructuring of existing loans, giving them room for a fixed term of one year of moratorium and two years additional timeline to repay term loans. They have also asked for the extension of the NPA (non-performing assets) classification period to 180 days from 90 days as they struggle to get timely payments from their buyers, leading to defaults in payments.
There is also a need to identify new sectors in MSMEs, like the travel and tourism industry. By prioritising tourism infrastructure development, it will lead to employment creation as well as growth of MSMEs. In addition, opportunity, innovation, new tech goods, and leveraging tech solutions to the global market should be used for increasing economic activity and employment.
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