New Delhi: The countdown to the Union Budget 2026-27 has officially begun as Finance Minister Nirmala Sitharaman held the first pre-Budget consultation meeting with top economists in New Delhi on Monday. As discussions pick up pace, expectations from both industry leaders and taxpayers are already in focus. Among the early submissions, the PHD Chamber of Commerce and Industry (PHDCCI) has presented its recommendations to the Finance Ministry, calling for key direct and indirect tax reforms.
PHDCCI Calls for Lower Tax Rates to Ease Burden on Taxpayers
In its pre-Budget recommendations to the Finance Ministry, the PHD Chamber of Commerce and Industry (PHDCCI) has proposed a revision in the income tax structure to make it more taxpayer-friendly. It suggested that income up to Rs 30 lakh be taxed at a maximum of 20 per cent, income between Rs 30–50 lakh at 25 per cent, and income above Rs 50 lakh at 30 per cent. If implemented, this move could bring significant relief to millions of taxpayers who currently see a large portion of their earnings go toward taxes and surcharges.
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Lower Taxes, Higher Revenue
PHDCCI highlighted that the corporate tax cuts announced in recent years haven’t hurt government revenue — in fact, collections have grown. Even after the corporate tax rate was reduced to 25 per cent, collections rose from Rs 6.63 lakh crore in 2018–19 to Rs 8.87 lakh crore in 2024–25. The industry body argues that lower tax rates encourage better compliance, attract more taxpayers into the system, and ultimately boost overall revenue.
PHDCCI Seeks Revival of Tax Breaks for Manufacturing and R&D
The chamber has urged the government to bring back Section 115BAB of the Income Tax Act, which earlier offered a concessional 15 per cent corporate tax rate to new manufacturing companies. According to PHDCCI, the benefit expired before industries could fully take advantage of it due to the COVID-19 pandemic and global disruptions. It also recommended restoring the weighted deduction of 150 per cent on R&D expenses under Section 35 to promote innovation, research, and value-added manufacturing in India.
In its indirect tax recommendations, PHDCCI has proposed several important changes to make the GST system more fair and practical for businesses. It suggested amending Section 11A of the CGST Act to allow refunds for taxes paid before retrospective exemptions — similar to provisions under Excise and Customs laws.
The chamber also called for removing the input tax credit (ITC) reversal condition under Section 15(3)(b)(ii), terming it cumbersome for suppliers. Additionally, it recommended relaxing Section 16(2), which denies ITC to buyers when the supplier defaults, proposing a reasonable tolerance limit and shifting liability only after recovery efforts are exhausted.
Will the Government Consider These Tax Reform Demands?
So far, there’s been no official word from the government on accepting PHDCCI’s proposals. However, with the cost of living rising and growing pressure from both industry and taxpayers, expectations for middle-class relief are stronger than ever.
Expanding tax slabs particularly for those earning up to Rs 50 lakh could make the upcoming Budget more people-friendly and give a much-needed boost to consumer spending. For now, all eyes are on how the government strikes a balance between maintaining revenue and meeting taxpayer expectations as Budget 2026-27 takes shape.
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