Indian Chamber of Commerce Budget expectations for 2021

Indian Chamber of Commerce has published its Budget expectations for 2021. The new budget has truly supported Indian MSMEs.

ICC Budget Expectations:

• The two percent interest subvention scheme for micro, small and medium enterprises (MSMEs) on loans was extended till March 31 next year with few business-friendly provisions. The scheme has truly supported Indian MSMEs. The coverage of the scheme is limited to all term loans and working capital to the extent of INR 100 lakh. We would like to propose that the scheme to extended further with enhanced coverage. We request Govt. to consider 3 – 4 % interest subvention to the extent of 300 lakh. The MSME sector nearly employs 120 million individuals. The expansion of the sector will further open job employment opportunities in the country. Since a key agenda of the Interest Subvention Scheme for MSME is to get them on-board the GST horizon, the relaxation will attract more MSMEs on board. Also, once on-board the GST platform, these units will become eligible to take part in any future aid pertaining to GST slabs.
• Consequent to the reduction of corporate tax rates, the differential between personal and corporate tax rates has widened. The highest marginal rate for individuals has now gone up to 42.74% against the normal Corporate Tax Rate of 25%. Personal Taxation has become very complicated. Further, there are different rates of taxes depending upon the source of income. In addition to this, different rates of the surcharge are applicable depending upon the total income and capital gains element in the total income both under the old and new tax regime. We would like to propose that the tax structure for individuals be simplified. This will also help in improving compliance. Also, it is necessary to reduce the personal tax rates for individuals so that there is a degree of equity and fairness in relation to structuring decisions.
• Dividend income now is currently taxable in the hands of the resident assessee at the respective slab rates, whilst the same is subjected to tax for non-residents at the rate of 20% or at the lower rate where ever Tax Treaty so provides. Taxability on dividend income should be capped at the rate of 15% for resident assesses as well.
• There is a need to incentivise new employment – Taxpayers can currently claim deduction equal to 30% of the amount of additional employee cost for employees having a salary not more than INR 25,000 per month under section 80JJAA of the Act. Salary levels across have increased substantially from 2016, and hence, threshold of INR 25000 per month should be raised to atleast INR 50,000 per month.

About ICC:

Founded in 1925, the Indian Chamber of Commerce (ICC) is the leading and only National Chamber of Commerce having headquarter in Kolkata, and one of the most pro-active and forward-looking Chambers in the country today. Its membership spans some of the most prominent and major industrial groups in India.