Budget 2026-27: Assocham Proposes Timely Payments, Cheaper Credit for MSMEs, Amnesty Scheme for Custom Related Disputes

New Delhi, Dec 18 (KNN) Industry body Assocham has urged the government to ensure timely payments, cheaper credit and lower input costs for micro, small and medium enterprises (MSMEs) besides providing support for sectors hit by US tariff.

In its Budget proposals for 2026-27, the industry body has called for strict enforcement of payment timelines to MSMEs and enable faster GST and RoDTEP (Remission of Duties and Taxes on Exported Products) refunds.

Assocham has recommended to the Finance Ministry that the government should offer time-bound support to sectors hit by tariff shocks. Among the sectors which have been grappling with the high tariff imposed by the Trump administration are textiles, gems & jewellery, and seafood.

In order to boost the MSME ecosystem in the country, the industry body has suggested the government to reduce power and input costs by expanding incentives for distributed renewable energy uptake by MSMEs.

The other key recommendations include expanding cash-flow–based lending using digital infrastructure and account aggregators.

In its pre-Budget memorandum, Assocham has proposed to provide targeted credit enhancement for NBFCs lending to MSMEs to reduce borrowing costs.

It also suggested to promote cross-border e-commerce exports by simplifying customs for low-value consignments and improving logistics.

The industry body noted that strengthening the innovation ecosystem, empowering small enterprises, and deepening capital markets will be essential to attract long-term investments.

Assocham also called for expanding long-term credit availability for MSMEs and emerging sectors via targeted refinance schemes and blended finance mechanisms in coordination with SIDBI and major NBFCs.

Direct Tax Proposals

Among the key direct tax proposals, Assocham suggested a lower tax regime to spur private investment. To boost manufacturing and key service sectors such as logistics, renewables and healthcare, it has called for a concessional tax rate on the lines of Section 115BAB for new companies.

"The benefit should also be extended to new investments or expansion made by the existing companies," it said.

The industry body has also proposed to allow 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, subject to certain conditions.

Among other suggestions, it said that the subsidy and incentive from the government should be taxable in the year of actual receipt. The subsidy/incentive received from the government is currently taxable in the year of recognition in books of account.

"This should be taxable in the year of actual receipt as generally it takes 2-3 years for actual receipt after recognition. Tax payment on notional income in the year of recognition creates significant cash outflow challenges to the companies," Assocham said.

Indirect Tax Proposals

In order to cut custom related litigations, Assocham has recommended the Finance Ministry to bring and a one-time settlement scheme on the lines of Sabka Vishwas (Legacy Dispute Resolution) Scheme and Vivas Se Vishwas Scheme.

As per Assocham, approximately over 40,000 litigations are pending under Customs demanding close to US$4.5 billion as of 2024.

The industry body has also proposed the government to revisit and rationalise the RoDTEP rate structure to reflect the actual incidence of unrebated taxes across sectors.

"Specifically for the Paper Industry, the RoDTEP rate may be enhanced to 3% (as against the current 1.1%) to more accurately reflect the embedded tax costs and restore parity with international competitors.," it said,

Further, the industry body said that until indigenous manufacturing capability is developed, technologically advanced equipment should be permitted under the Project Import Scheme with concessional duties and without mandatory BIS restrictions.

(KNN Bureau)