The finance ministry will unveil a blueprint within 45 days for phasing out corporate tax exemptions over the next four years, in order to reduce the tax rate from 30% at present to 25%, revenue secretary Shaktikanta Das said in New Delhi. The ministry has to retire tax breaks in such a way that tax rate cuts of about 1.25 percentage points a year till 2019-20 does not hit revenue receipts.
Das also said the government was doing all preparatory work to introduce the proposed goods and services tax (GST) from April 1 next year, and that it was well equipped to deal with any capital flow related issues that could arise from the economic crisis in Greece. The revenue secretary also assured that all attempts at widening the tax base would be non-intrusive in nature.
Before withdrawing tax incentives, the blueprint for removal of exemptions would be released for public comments and debate, Das said at a conference organised by the Indian Venture Capital Association here. The plan was announced by finance minister Arun Jaitley in his budget speech for 2015-16. “The fiscal deficit (target) is sacrosanct and cannot be compromised and there is the whole issue of affordability in a single year. Therefore, we cannot reduce corporate tax rate from 30% to 25% in one go,” Das said.
The finance ministry is now looking at the feasibility of possible GST rates that would replace most of the indirect taxes on goods and services after the mega tax reform. Das said the medium-term outlook for the economy was “very positive” and that if businesses and the government work together, there was no reason for not realising 8-9% growth rate.
Meanwhile, the Congress party is reported to have said it could support the GST bill provided external affairs minister Sushma Swaraj and Rajasthan chief minister Vasundhara Raje Scindia resign from their respective posts, in the light of the Lalit Modi controversy.