PHDCCI suggests Risk-Based Regulatory Reforms to Ease Compliance burden in Heavy Industries Sector in India

New Delhi, April 1, 2026: PHDCCI highlights structural bottlenecks that are affecting the heavy industries sector related to simplification, rationalization, and digitization of regulatory processes to be submitted to a competent authority.
·     Companies currently file multiple annual forms such as MGT-7 and AOC-4 with overlying disclosures. This duplication increases compliance costs and elevates penalty risks without adding regulatory value.
·     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.
·     ITC availability remains contingent on supplier compliance, leading to situations where compliant buyers are penalized for supplier defaults. Additionally, retrospective scrutiny and penalties have increased uncertainty for businesses.
·     Issues highlighted include higher-than-justified haircut requirements for government securities, restrictions on multiple CSGL accounts, and inconsistent price band criteria across service providers, and constraints in liquidation of pledged securities—collectively increasing market risk exposure for fixed-income participants.
Recommended Reforms:
PHDCCI proposed targeted reforms aligned with the principles of decriminalization, trust-based governance, and risk-based regulation. These include the introduction of a unified annual return by integrating multiple corporate filings into a single simplified form, particularly for MSMEs, to reduce duplication and compliance costs.
It was also recommended that tax audit thresholds be streamlined by increasing the limits to approximately ₹5–10 crore, thereby easing the compliance burden on smaller enterprises.
In addition, stakeholders suggested harmonizing overlapping provisions of TCS and TDS to streamline tax compliance challenges.
On the GST front, a key reform proposed is the delinking of input tax credit eligibility from supplier compliance, with accountability instead placed on defaulting suppliers.
In case of financial markets, the need for standardization of operational norms for CSGL accounts, rationalization of haircut policies for government securities, and greater transparency in credit limit adjustments is required to improve efficiency.
“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 manufacturing sector said Rajeev Juneja, President, PHDCCI.”