PHDCCI proposes risk-based reforms to reduce compliance load in heavy industries

Industry body PHD Chamber of Commerce and Industry (PHDCCI) has recommended a set of risk-based regulatory reforms aimed at reducing the compliance burden in India’s heavy industries sector, particularly for micro, small, and medium enterprises (MSMEs).

In its submission to the government, PHDCCI highlighted structural bottlenecks across corporate filings, taxation, and financial market regulations that are raising costs without adding meaningful oversight.

A key concern flagged is duplication in corporate compliance. Companies are currently required to file multiple annual forms such as MGT-7 and AOC-4, which involve overlapping disclosures. “This duplication increases compliance costs and elevates penalty risks without adding regulatory value,” the chamber noted.

The body also pointed out that a large number of MSMEs are subject to mandatory tax audits due to relatively low thresholds under the Income Tax Act, leading to disproportionate compliance costs. It further flagged challenges arising from the coexistence of Tax Collected at Source (TCS) and Tax Deducted at Source (TDS), which create reconciliation issues and administrative complexity.

On the GST front, PHDCCI said input tax credit (ITC) availability being linked to supplier compliance penalises buyers for vendor defaults and adds uncertainty due to retrospective scrutiny.

The chamber also raised concerns in financial markets, including high haircut requirements for government securities, restrictions on multiple CSGL accounts, and inconsistent price band norms, which together increase risk exposure for fixed-income participants.

Push for simplified, unified framework

To address these issues, PHDCCI has proposed introducing a unified annual return by integrating multiple corporate filings into a single simplified form, especially for MSMEs.

It has also recommended increasing tax audit thresholds to ₹5–10 crore, and harmonising overlapping TCS and TDS provisions to streamline tax compliance. In GST, the body suggested delinking ITC eligibility from supplier compliance and shifting accountability to defaulting vendors.

For financial markets, it called for standardisation of CSGL account norms, rationalisation of haircut policies, and greater transparency in credit limit adjustments.

“The consultation on Non-Financial Regulatory Reforms is important for a simplified regulatory architecture with emphasis on reducing compliance burden, and enabling digital, risk-based frameworks required for ease of doing business, particularly for MSMEs,” said Rajeev Juneja, President, PHDCCI. 

“A mature and predictable regulatory environment will enhance industry competitiveness and support sustained growth in manufacturing exports,” he added.