Indian Chamber of Commerce Urges Overhaul of Income Tax Act 1961 and Customs Duties Review

The Indian Chamber of Commerce (ICC) has urged the central government to form a commission to thoroughly review and simplify the Income Tax Act 1961.

“This Act is outdated. The annual Budget amendments have made it increasingly complex and difficult to comprehend. These changes have created numerous anomalies, resulting in a surge of legal cases,” the chamber explained.

Additionally, the ICC suggested a restructuring of customs duties in key sectors such as steel, solar, aluminium, and lithium-ion batteries to enhance domestic manufacturing.

Finance Minister Nirmala Sitharaman is set to present the annual budget on July 23.

The ICC President stressed the need for a “comprehensive rationalization” of customs duties, asserting that this move has the potential to transform India into a global manufacturing hub.

He pointed out that current levies on raw materials unfairly disadvantage domestic players, particularly downstream businesses.

He proposed addressing the inverted duty structure by reducing the tax on liquefied petroleum gas (LPG) from 5 percent to 2.5 percent.

“To support domestic manufacturing, we must increase duties on polymers such as PVC, PET, PP, and polyesters to 10 percent,” he stated, emphasizing the goal of achieving self-sufficiency in the petrochemical sector.

Regarding the aluminium foil sector, the president highlighted that the domestic industry has been facing significant losses due to an anti-dumping duty on raw materials, while finished goods from China are not subject to any import duties.