Budget 2025: Cut IT rates, hand out vouchers to drive consumption, urges CII
The Confederation of Indian Industry (CII) recommends personal income tax cuts and excise duty reduction on fuel to enhance disposable incomes and stimulate spending. They also propose increasing daily wages under MGNREGA and payouts under PM-Kisan. Engineering Exports Promotion Council (EEPC) suggests a faceless GST audit system to aid MSMEs in reducing compliance costs and focusing on growth.
Engineering Exports Promotion Council (EEPC) has proposed a faceless GST audit system to support micro, small and medium enterprises (MSMEs). ET Year-end Special Reads How India's political landscape changed after assembly polls in eight states Trent, Zomato among 33 biggest wealth creators this year.
What will make money in 2025? Telcos investment recovery in limbo, price war with satcom services likely in 2025 "Domestic consumption has been critical to India's growth story, but inflationary pressures have somewhat eroded the purchasing power of consumers," said Chandrajit Banerjee, director general of Confederation of Indian Industry (CII). "Government interventions could focus on enhancing disposable incomes and stimulating spending to sustain economic momentum.
" Persistent food inflation pressures impinge upon low-income rural households who allocate a larger share to food in their consumption basket, Banerjee said.
Retail inflation fell to 5.5% in November, after rising to a high of 6.2% in October.
Reducing excise duty on fuel, which constitutes a significant part of household expenses, would lower inflation and increase disposable income, CII said.
It also suggested reducing the marginal tax rate for personal income up to ₹20 lakh per annum, which would encourage higher consumption and enhance tax revenue.
"The gap between the highest marginal rate for individuals at 42.74% and the normal corporate tax rate at 25.17 %, is high," CII said in its release.
Additionally, it proposed raising the daily minimum wage under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to ₹375 from ₹267, which would involve an additional expenditure of ₹42,000 crore.
The annual payout under the PM-Kisan scheme should also be raised to ₹8,000 from ₹6,000, incurring an additional cost of ₹20,000 crore, assuming 100 million beneficiaries, the industry body said.
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CII suggested the introduction of consumption vouchers for specific items and timeframes.
These vouchers could target Jan-Dhan account holders who are not beneficiaries of other welfare schemes.
Banerjee highlighted a decline in household savings due to lower returns on bank deposits compared to equities and mutual funds, combined with higher tax burdens on interest income.
To address this, CII recommended reducing the tax rate on interest income from deposits and shortening the lock-in period for fixed deposits with preferential tax treatment from five years to three years.
EEPC India has proposed the introduction of a faceless goods and services tax (GST) audit system.
"This system, by using technology and ensuring anonymity, will reduce compliance costs.
..(and) streamline procedures, allowing MSMEs to focus on growth and innovation," said Pankaj Chadha, chairman of EEPC India.
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