Assocham suggests tax simplification, rationalisation for forthcoming Budget

New Delhi: Industry body Assocham on Thursday proposed several recommendations, like tax simplification and rationalisation, for the forthcoming Union Budget to enhance ease of doing business and further boost investments in the country.

Representatives of the industry chamber met Revenue Secretary Arvind Shrivastava and submitted a pre-Budget memorandum, detailing suggestions for direct and indirect taxes.

The body suggested the restoration of the concessional tax rate of 15 per cent for new manufacturing companies (as under section 115BAB under the ITA for companies incorporated up to March 2024).

"This will enable India to remain attractive for making fresh capital investment, provide a boost to the domestic economy and also encourage exports," Assocham said.

It has also proposed a loan waiver as a part of the resolution plan under the Insolvency and Bankruptcy Code (IBC) to help the resolution process.

"Waiver of loan as a result of IBC process (by COC) should not be considered as an income in the hands of debtor as that goes contrary to the purpose behind the IBC," it said, adding that an exception should be carved out under relevant sections of the Income Tax Act.

Other recommendations relate to tax deduction at source, definition of associated enterprises, tax neutrality for fast-track demergers, and setting up approved data centres.

On the indirect tax front, Assocham suggested the introduction of a comprehensive tax amnesty scheme under the Customs regime to provide an opportunity to taxpayers to clear past baggage and reduce the litigation burden.

"While such an amnesty scheme is requested for customs duties as a whole, there is an even stronger case for extending this relief to pre-GST additional duties of customs, viz Countervailing Duty (CVD) and Special Additional Duty (SAD), which have since been subsumed under the GST. Addressing disputes relating to these erstwhile," the chamber's memorandum said.

It further said the voluntary disclosure provision, introduced in the Budget 2025, has not yet been implemented due to pending changes in back-end systems and the absence of supporting rules.

"CBIC may consider expediting the issuance of comprehensive rules and guidelines for Section 18A, clearly addressing its applicability (including retrospective effect and relevant timelines) and the procedures for true-up and true-down," it said.

Assocham also pitched for the introduction of a comprehensive rationalisation of timelines under the Customs Act, similar to Section 74A under the GST.

It further said that to improve accessibility, reduce delays, and promote uniform interpretation of customs regulations nationwide, there is a pressing need to expand the physical presence and operational capacity of the Customs Authority for Advance Ruling (CAAR).

It also said there is an urgent need to provide a formal clarification on the precise meaning of the terms 'fraud', 'forgery', 'outright smuggling', and 'clandestine removal of excisable goods' within the context of Authorized Economic Operator (AEO) certification.

The government has started the process for the presentation of the next Union Budget. Finance Minister Nirmala Sitharaman is scheduled to present the Budget in Parliament in February.