Budget 2025 Expectations: ASSOCHAM Urges Single TDS Rate, Decriminalise Certain Defaults
New Delhi: India's leading trade and industry association, Associated Chambers of Commerce and Industry of India (ASSOCHAM), has submitted a pre-budget memorandum to the Finance Ministry seeking key reforms in direct taxes to ease compliance. The suggestions include introducing a single tax deduction at source (TDS) rate of 1% or 2%, decriminalizing certain defaults, and rationalizing various provisions to reduce litigation.
ASSOCHAM, which serves as a platform for businesses across sectors to collaborate and advocate for economic growth and ease of doing business, has urged the government to introduce these reforms in its upcoming budget. The association's President, Sanjay Nayar, stated that corporate India is looking forward to measures that would boost both investment and consumption.
Key demands from ASSOCHAM include:
- Single TDS Rate: Introduce a 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.
- Decriminalisation of TDS Defaults: Decriminalize certain TDS defaults, as the provisions are quite severe, particularly under Section 276 B, which provides imprisonment of up to seven years if a person fails to comply with some of the TDS provisions.
- Flexibility in Claims and Assessments: Enable taxpayers to make additional claims in assessment proceedings and withdraw claims made in the return at the time of assessment.
ASSOCHAM also seeks tax neutrality for entity conversions, simplification of business reorganisation tax provisions, rationalizing tax treatment of buybacks, and reducing litigation through easier compliance. The association expects these reforms to be part of the Union Budget 2025-26.
The final budget is anticipated to be presented in early February 2025. With ASSOCHAM's suggestions, corporate India may see positive changes in the upcoming financial year, promoting ease of doing business and tax compliance.