New Delhi, April 1 The PHDCCI, an industry lobby group, proposed targeted reforms on Wednesday, including the introduction of a unified annual return by integrating multiple corporate filings into a single simplified form, for companies operating in the heavy industries sector, particularly for MSMEs, to reduce duplication and compliance costs.
It also recommended that the thresholds for tax audits be streamlined by increasing the limits to approximately ₹5-10 crore, thereby easing the compliance burden on smaller enterprises.
On the GST front, a key reform proposed is the separation of input tax credit (ITC) eligibility from supplier compliance, with accountability instead placed on defaulting suppliers, PHDCCI stated.
It also highlighted structural bottlenecks that are affecting the heavy industries sector, related to the simplification, rationalization, and digitization of regulatory processes, which should be submitted to a competent authority.
According to the industry lobby, companies currently file multiple annual forms such as MGT-7 and AOC-4 with overlapping disclosures. This duplication increases compliance costs and elevates penalty risks without adding regulatory value.
Moreover, it said, a large number of MSMEs fall under mandatory tax audit requirements due to relatively low thresholds under the Income Tax Act. This results in high compliance costs that are not commensurate with the underlying risk.
The coexistence of Tax Collected at Source (TCS) and Tax Deducted at Source (TDS) provisions creates duplication, reconciliation challenges, and additional administrative burden without generating significant incremental revenue, PHDCCI stated.
ITC availability remains contingent on supplier compliance, leading to situations where compliant buyers are penalized for supplier defaults, it said. Additionally, retrospective scrutiny and penalties have increased uncertainty for businesses.
"The consultation on Non-Financial Regulatory Reforms is important for a simplified regulatory architecture with emphasis on reducing compliance burden, and enabling digital, risk-based frameworks required for ease of doing business, particularly for MSMEs. A mature and predictable regulatory environment will enhance industry competitiveness by dampening down regulatory risks and support sustained growth in exports of products related to the manufacturing sector," said Rajeev Juneja, President, PHDCCI.