PHDCCI urges govt to abolish Securities Transaction Tax

During an industry interaction with Finance Minister Nirmala Sitharaman, PHD Chamber of Commerce and Industry (PHDCCI) urged the government to abolish the Securities Transaction Tax (STT).

“Since the long-term capital gains tax on shares is now on par with other assets, PHDCCI suggested that the Securities Transaction Tax (STT) be abolished. This move would reduce the tax burden on investors and encourage more investment in the stock market, thereby stimulating economic growth,” the industry body says.

A simplified tax structure can reduce compliance costs and increase disposable income, boosting consumer spending, says PHDCCI. This increased demand encourages business expansion, driving economic growth, says Hemant Jain, president of PHD Chamber of Commerce and Industry. Additionally, the reduction in tax burdens can help mitigate inflationary pressures too, he adds.

PHDCCI suggests to reduce tax rates for individuals and limited liability partnership (LLP) firms to 25% as this reduction would not only ease the financial burden on businesses and individuals but would also stimulate investment and economic activity across sectors.

Jain emphasised the need to completely remove the inverted duty structure that currently exists in several industries, particularly in sectors such as cement, aluminium, steel, packaging material, paper and paperboard industry. The inverted duty structure leads to higher costs for domestic manufacturers, hindering their competitiveness in the global market, says Jain.

The industry body further pointed out that the ease of doing business in India needs to be further improved and percolated at the ground level. This includes reducing the cost of doing business, particularly in terms of capital, power, logistics, land, and compliance costs.

According to the PHDCCI, simplifying procedures and cutting down on regulatory burdens would make it easier for businesses to thrive and would encourage both domestic and foreign investments in India.

PHDCCI is expecting a significant increase in the size of the Union Budget from ₹48.2 lakh crore in 2024-25 to over ₹51 lakh crore for 2025-26. Capital expenditure, which is crucial for infrastructure development, should also see a marked increase, with PHDCCI suggesting a rise from ₹11.11 lakh crore in 2024-25 to over ₹13 lakh crore in 2025-26. Such a capital expansion is seen as critical for enhancing demand trajectory, creating employment opportunities, and spurring overall economic growth, says PHDCCI.

The industry association recommends expanding the Production Linked Incentive (PLI) scheme beyond the 14 sectors. The scheme has been successful in promoting manufacturing in certain sectors, and expanding it to include new areas such as medicinal plants, handicrafts, leather and footwear, gems and jewellery, and the space sector would further enhance India’s manufacturing capabilities, it says.