PHDCCI Seeks Tax Relief, Stronger Credit and Equity Support for MSMEs in Budget 2027-28

New Delhi, Nov 11 (KNN) The PHD Chamber of Commerce and Industry (PHDCCI) has urged the government to abolish long-term capital gains (LTCG) tax on equity investments, cut short-term capital gains (STCG) tax from 20 per cent to 10 per cent and lower securities transaction tax (STT) rates in its recommendations for the Union Budget 2027-28.

The chamber submitted its pre-Budget proposals during a meeting with Union Finance Minister Nirmala Sitharaman, seeking measures to encourage investment, improve capital market competitiveness and strengthen access to finance for micro, small and medium enterprises (MSMEs), ANI reported.

Under the current provisions, LTCG exceeding Rs 1.25 lakh on eligible equity investments is taxed at 12.5 per cent.

Credit Support for MSMEs

PHDCCI proposed extending the overdue period for classifying MSME loans as non-performing assets (NPAs) from 90 days to 180 days, arguing that the move would help smaller businesses manage longer working capital cycles and delayed payments.

PHDCCI President Anil Gupta said, “To strengthen India's MSME ecosystem further, PHDCCI recommends the change in classification of non-performing assets (NPA), enhancement of PM MUDRA Loan Limits, strengthening CGTMSE Implementation and Direct Equity Support.”

It also sought higher loan limits under the Pradhan Mantri MUDRA Yojana (PMMY), proposing ceilings of Rs 1 lakh for Shishu and Rs 10 lakh for Kishore. For Tarun/Tarun Plus, it proposed a Rs 20 lakh ceiling, although the existing Tarun Plus category already provides loans of up to Rs 20 lakh to borrowers who have repaid earlier Tarun loans.

The chamber called for stronger implementation of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), including stricter bank compliance and a centralised portal to track loan applications and rejection reasons. Eligible credit facilities of up to Rs 10 crore are already covered under the scheme's guarantee framework.

PHDCCI also recommended direct government equity support for MSMEs through the Fund of Funds Scheme, with dedicated allocations for startup seed capital and participation in SME initial public offerings.

The chamber said MSMEs contribute around 31 per cent to India's GDP, account for 48.58 per cent of exports and provide livelihoods to about 32.8 crore people.

“We believe that ease of access to credit, equity support, rationalisation of taxation and strong implementation of Government schemes will foster faster growth of Indian industry as a global manufacturing hub,” PHDCCI Secretary General and CEO Dr. Ranjeet Mehta said.

(KNN Bureau)