Budget 2025: FICCI calls for increased capex, tax simplification

In the pre-budget expectations letter submitted to Finance Minister Nirmala Sitharaman today, industry body FICCI (Federation of Indian Chambers of Commerce and Industry) has stated the government’s focus on public capex on physical, social and digital infrastructure should continue to maintain growth momentum. FICCI said there is a need for the government to maintain the simplicity of the tax process by reducing TDS rates on several payments from 5% to 2%.

“The capital outlay in Union Budget 2024-25 was budgeted at ₹11.11 lakh crore. The quality of the fisc has improved over time with revenue expenditure being contained and productive capital expenditure being prioritised. We propose the government to consider increasing capex in FY26 by 15% over 2024-25,” FICCI states.

The industry body suggested creating inter-state institutional platforms for reforms in land, labour and power while keeping in mind the GST council guidelines.

Adding to the tax simplification, FICCI has proposed to streamline the multiple TDS/TCS rates by combining them into a simple two or three-tier rate structure, to avoid classification disputes and ensure no blockage of working capital in the industry. “Also, stop the practice of imposing TDS/TCS on transactions that are subject to GST,” it says.

The industry body recommended introducing a new independent dispute resolution forum composed of independent experts such as retired judges of the Supreme Court or High Court, retired President or Vice President of the Tribunal or professionals like lawyers or Chartered Accountants to decrease the litigation matters related to direct taxes. “A time-bound resolution by an independent forum will build confidence amongst taxpayers who may come forth to settle the matters instead of pursuing litigation in fear of penalty and prosecution.”

FICCI pointed out the need to focus on sustainability, reminding that India has set a ‘net zero’ target for 2070. It suggested developing pathways for green transition in all sectors to achieve the net zero target by 2070. It proposed setting up a Centre of Excellence to develop and evaluate climate-smart agriculture technologies. “Commercialise at least 5 climate-smart technologies, each adopted by at least 5 million farmers over the next 3 years.”

The association seeks the creation of a statutory body to certify daycare centres and oversee their quality, ensuring standardisation and regular monitoring. Building dormitories in the manufacturing sector can encourage more women's participation. Moreover, it further proposes a tax exemption, up to a specified limit, for working women on childcare expenses for children up to the age of 5.

The association urged the creation of an agricultural yields mission targeting the 100 least developed districts. It also proposed a national initiative to train 3 million farm technicians over the next five years, equipping them to introduce innovative technologies and services to farmers. “Each village (India has 6 lakh villages) could have 5-6 technicians specialized in technologies such as soil testing, micro irrigation, drones, sensors, farm machinery, post-harvest technologies as well as operation and maintenance of in-village water supply systems.”

The national body has called for a boost in public health spending, noting that India’s healthcare expenditure reached 2.1% of GDP in FY23 and 2.2% in FY22, against 1.6% in FY21, as per the Economic Survey. The industry recommends raising this allocation to 2.5% of GDP by 2025, as stated in National Health Policy 2017. “Increase the tax exemption for preventive health check-ups under Section 80D from ₹5,000 to ₹20,000.”