Tax cuts top wish list of all stakeholders – The Navhind Times

Apart from tax breaks for the salaried class to boost demand, all eyes are on whether the 2024-25 budget will take into account suggestions from various industries

Finance Minister Nirmala Sitharaman on Friday concluded consultations with various stakeholders, including industry and social sector representatives, as part of the budget preparation process.

The Budget will be presented on July 23. Being the first Budget of the government in its third term, it is expected to chart a path for a Vikshit Bharat by 2047.

The pre-budget consultations began on 19 June and ended on 5 July. During the in-person consultations, over 120 invited persons from 10 stakeholder groups took part in the meetings, including experts and representatives of agricultural associations and agricultural economists, trade unions, education and health, employment and skills development, SMEs, trade and services, industry, economists, the financial sector and capital markets, as well as infrastructure, energy and urban areas sectors.

The meetings were chaired by Sitharaman and attended by officials from various ministries.

Several sectors have submitted memorandums to the finance ministry on budget expectations. The hotel industry wants the government to grant infrastructure status to hotels to make investments in new properties more attractive, rather than categorising them as luxury goods or even sin goods, given the sector’s potential to play a key role in India’s growth.

They also want the government to consider introducing incentives in the form of tax breaks or subsidies for implementing sustainable and environmentally friendly practices.

“The sector is burdened with high taxes, expensive and various licenses, approvals and compliances. Hotels are capital intensive with a long development period. The cost of running hotels is high and largely fixed. This makes hotel investments risky. There is a need to make hotel investments more attractive by improving the investment rate and promoting ease of doing business,” said Hotel Association of India (HAI) president KB Kachru.

The pharmaceutical industry is looking for R&D incentives, corporate tax breaks and an effective intellectual property rights regime to spur growth for domestic businesses.

Presenting the sector’s wish list, Organisation of Pharmaceutical Producers of India (OPPI) director general Anil Matai urged the government to consider methods to encourage investment in R&D, such as deductions on R&D expenses, research-related incentives for multinationals and corporate tax breaks.

“Recognizing the high risk and long lead time for R&D, we suggest extending the scope of Section 115BAB of the Income Tax Act, 1961 to companies engaged solely in pharmaceutical R&D and providing for 200 percent deduction rate on R&D expenses”

Matai said.

“This would significantly enhance the sector’s ability to undertake necessary research and development, including clinical trials and patent registration,” he added. Matai also sought to establish an effective intellectual property rights regime to drive growth and encourage research-based pharmaceutical companies, both global and domestic, to introduce innovative therapies in India to address unmet medical needs.

He demanded the introduction of incentives for centers and companies that provide specialized training programs for pharmaceutical industry employees.

The expectations of the real estate sector range from extending corporate tax breaks to phasing out subsidies. NAREDCO Chairman Niranjan Hiranandani stressed the need to extend corporate tax breaks to all, phasing out subsidies and a comprehensive review of tax policy.

Raising the mortgage interest deduction limit from Rs 2 lakh to Rs 5 lakh and setting the rate of return on long-term capital gains at 10 per cent, comparable to equities, are key goals for developers.

The sector also wants to reduce the holding period for a property from 24-36 months to 12 months so that it can be considered a long-term capital asset.

“The dividend tax rate for resident investors may be retained at 10 per cent to avoid discrimination between resident and non-resident investors. Corporate tax breaks provided to manufacturing companies must be extended to all entities such as companies, partnerships and individuals to ensure uniformity,” Hiranandani said.

The surcharge, introduced as a temporary measure, is expected to be phased out as tax collections pick up. Extending the benefits of the 15 percent alternative tax rate to infrastructure and housing projects will help attract more investment and boost development activity, according to real estate players.

As India’s energy transformation accelerates, the energy sector is pinning its hopes on policy support and tax benefits. Energy companies are expecting a reconsideration of GST rates across the renewable energy supply chain and feasibility gap funding for newer sectors such as green hydrogen, offshore wind and energy storage, among others.

The green energy industry is seeking a reduction in GST rates on renewable energy components. “Reducing GST on solar modules, wind turbines and electrolysers from the current rates to 5 per cent would significantly reduce project costs, thereby bringing down the cost of renewable energy and hydrogen for consumers across India,” green energy providers said. PTI