Tax cuts welcome, but widening tax base is crucial: FICCI president

Rupali Chowdhury, president of the Foreign Investors’ Chamber of Commerce and Industry (FICCI), welcomed the budget’s emphasis on policy predictability, saying it had been prepared at a time when the economy was grappling with deep challenges.

“The government assumed office amid a severe economic crisis. In that context, balancing revenue mobilisation with measures to stimulate growth is not an easy task,” she said.

She said that while businesses would have preferred reductions in supplementary duties and other taxes, the government also needs to maintain revenue streams and support economic activity through development spending and incentive packages.

Under the proposed roadmap, listed companies would pay a corporate tax rate of 22.5 percent, while non-listed firms would be taxed at 27.5 percent. Both categories could qualify for reduced rates of 20 percent and 25 percent, respectively, if all income is channelled through banking transactions.

Chowdhury praised the budget’s commitment to gradually lowering corporate tax rates, saying the move would be welcomed by investors. However, she stressed that broadening the tax base remains equally important.

“It is not enough to state the objective. The key question is how it will be implemented,” she said, adding that tax reforms should focus on automation and user-friendly systems that work efficiently for both taxpayers and the National Board of Revenue.

She also urged policymakers to avoid the retrospective application of proposed rules on inter-company loans.

Existing loan agreements, she said, should be allowed to continue under the terms on which they were signed, while any new restrictions could apply to future contracts.

“What businesses need is certainty. Long-term agreements should not be disrupted by policy changes introduced after the fact,” she said.

Chowdhury further highlighted the need for reforms in agricultural marketing, saying successive governments had struggled to ensure that farmers receive fair prices for their produce.

She said an effective mechanism must be developed so that growers can secure the returns they deserve.