FICCI propose Tax Exemptions to Boost Women's Workforce in Union Budget 2025-26

By: WE Staff | Thursday, 2 January 2025

The Federation of Indian Chambers of Commerce and Industry (FICCI) has proposed tax exemptions on daycare expenses for the Union Budget 2025-26 to boost women's workforce participation and gender diversity. The proposal also calls for a statutory body to certify daycare centers and allow CSR funds for women's dormitories in manufacturing sectors. These measures aim to support women's economic growth and ease financial burdens on working parents.

The Indian preschool and childcare market is growing rapidly, reaching USD 4.2 billion in 2023, and is projected to reach USD 10.2 billion by 2032, driven by urbanization, disposable incomes, and awareness of early childhood education. The market is expected to grow by $31.8 million between 2023 and 2028, accelerating by 7.46 per cent CAGR. FICCI reports that nuclear family structures and working parents increase the demand for quality childcare services. It notes that constructing dormitories could increase women's participation in manufacturing, as commuting to work from home is often seen as a constraint.

FICCI suggests that the care economy in India can boost economic growth and empower women through tax exemptions on daycare expenses and CSR funds for women's dormitories and childcare expenses up to five years old. It urged the Indian government to simplify the tax regime to improve business ease and attract investments. The government has reduced TDS rates from 5 per cent to 2 per cent through the Finance (No. 2) Act 2024. A simple two or three-tier rate structure would prevent classification disputes and industry blockage.

FICCI recommends halting TDS/TCS on GST-related transactions and introducing a new forum of independent experts to reduce litigation on direct tax matters. This would build confidence among taxpayers, encourage settlements, and reduce prolonged litigation and demands/refunds. The forum would also be staffed by professionals with minimum experience.