Last Updated:
Union Budget 2025: ASSOCHAM said that ease of tax compliance is one of the critical constituents of ease of doing business.
Union Finance Minister Nirmala Sitharaman showcases a tablet wrapped in a red pouch carrying the Budget documents, outside the Finance Ministry. (File photo/PTI)
Budget 2025 Expectations: Seeking rationalisation of TDS rates, ASSOCHAM in its pre-budget memorandum to the Finance Ministry has pressed for a single/ uniform rate of 1% or 2% for all payments made to resident assesses to avoid litigation on interpretational issues and ensure ease of tax compliance.
ASSOCHAM, Associated Chambers of Commerce and Industry of India, is one of India’s leading trade and industry associations. It serves as a platform for businesses across sectors to collaborate, share ideas, and advocate for policies that promote economic growth and ease of doing business.
Decriminalisation of TDS Defaults
The suggestions in the presentation relating to direct taxes also sought decriminalisation of certain TDS (Tax Deduction at Source) defaults, as the provisions relating to the same are quite severe. It said Section 276 B provides for imprisonment of up to seven years if a person fails to ensure compliance with some of the TDS provisions.
Restricting Criminal Proceedings
“Criminal proceedings should apply only when the taxpayer has enriched himself at the expense of the Government, and not to cases where certain payments/benefits are made or provided without applying TDS. We expect tax reforms aimed at reducing litigation, and easy and better compliance to be part of the Union Budget for 2025-26. Corporate India is giving some constructive recommendations in this regard. India Inc is also looking for measures that would boost both investment and consumption, said Sanjay Nayar, President of ASSOCHAM.
Flexibility in Claims and Assessments
Modifications should be considered to enable taxpayers to make additional claims in the course of assessment proceedings. Similarly, taxpayers should be able to withdraw claims made in the return at the time of assessment, and such a withdrawal should result in an immunity from penalty.
Ease of Tax Compliance
Ease of tax compliance is one of the critical constituents of ease of doing business. The ASSOCHAM pre-budget memorandum makes several specific suggestions to the government to rationalise TDS rates and bring in a flexible system of filing tax returns.
Promoting Tax Neutrality
“Seeking flexibility and ease of compliance, the industry is seeking full tax neutrality which should be provided at both the entity and owner levels for all forms of entity conversions. This will go a long way in providing flexibility to businesses to choose entity forms that are most suited to them”, said Deepak Sood, Secretary General ASSOCHAM.
Simplification of Business Reorganisation Tax Provisions
Tax neutrality should also be provided for amalgamations and demergers. Currently, this is allowed only for companies and tax-neutral mergers and demerger and not for slump exchanges. Besides, tax neutrality should be provided to Indian resident shareholders of foreign amalgamating and demerged entities.
At present, there are gaps in the provisions relating to capital gains exemptions or carry forward of losses for amalgamations, demergers and other forms of business reorganisations like slump exchange/ sale. “These can be simplified and expanded, to enable businesses and investors to optimise their operations and holdings without facing tax costs and without going through the lengthy process of NCLT,” the memorandum suggested.
Rationalising Tax Treatment of Buybacks
It said buyback proceeds should be treated as dividends only to the extent the company undertaking the buyback possesses accumulated profits. The balance consideration should enter the capital gains computation like capital reductions and liquidations. Under the current provisions, the entire proceeds received by a shareholder upon buyback are taxed as dividends regardless of whether the company possesses accumulated profits or not.
Union Budget 2025 Date
The final budget is anticipated to be presented in early February 2025.
