Union Budget 2025-26: 25% tax slab & bigger rebates ahead!

In a pre-Budget meeting on December 26, EEPC India proposed a new conditional 25% income tax slab for MSME manufacturing units. These units, including partnerships, LLPs, and sole proprietorships, could benefit from the reduced tax rate. However, the proposal includes a condition: the additional 10% saved must be reinvested back into the business.

EEPC believes this move would provide MSMEs with an extra financial cushion for expansion and working capital. It would also improve liquidity and potentially generate more jobs due to increased business growth. The proposal aims to bolster the MSME sector, which is crucial to India’s economy.

Finance Minister Nirmala Sitharaman chaired her fourth pre-Budget consultation in New Delhi, bringing together experts from various sectors like trade, industry, and exports. These discussions help shape the Union Budget for 2025-26.

Additionally, EEPC India pushed for an increase in funds allocated to the Market Access Initiative (MAI) Scheme. The organization suggested raising the amount to Rs 1,200 crores to assist MSMEs in attending global trade events and connecting with international counterparts. According to EEPC India Chairman Pankaj Chadha, this could help MSMEs tap into global markets, especially those from rural and interior regions.

To further support MSMEs, EEPC recommended introducing a policy for 100% depreciation on investments in solar power generation. This would follow the same framework as previous incentives for wind power. EEPC argued that this policy could encourage MSMEs to adopt sustainable energy practices, reduce their carbon footprint, and lower operational costs.

EEPC India also raised concerns about the potential safeguard duty on steel imports. Steel is vital to MSME production, accounting for about 60% of production costs. Introducing a safeguard duty could increase the price of steel, further stressing MSMEs already vulnerable to global competition. To address this, EEPC proposed a transparent mechanism that would allow MSMEs to access steel at affordable prices.

Moreover, like the Federation of Indian Export Organisations (FIEO), EEPC India recommended raising the cap under the Interest Equalization Scheme to Rs 10 crores. This change would offer more financial support to MSME exporters, making them more competitive in the global market.

With these proposals, EEPC India hopes the government will provide more substantial support to MSMEs, promoting their growth, sustainability, and global reach. These measures could be pivotal in helping MSMEs thrive amid global challenges.