Seeking a clear road-map for reduction of corporate tax rate from 30% to 25%, India Inc, in their Budget wishlist, said withdrawal of tax incentives should come with removal of minimum alternate tax.
“As far as taxation is concerned, we have asked for a clear road-map on the 25% (corporate tax)… We are totally in support of removal of incentives and allowances,” said industry body CII president Sumit Mazumder after meeting finance minister Arun Jaitley and officials.
On November 20, the finance ministry issued an initial road-map to cut the corporate tax rate to 25% from the current 30% over the next four years. It has chosen to remove most of the tax exemptions contributing to a substantial part of the government’s tax expenditure (revenue forgone due to incentives) from April 1, 2017. Of course, existing beneficiaries and those who will have completed investments and started work by the above sunset date will continue to enjoy the benefits for the periods defined.
The CII said the government should reduce corporate tax rate from 30% to 22% and announce a year-wise road-map for the same.FICCI president Harshavardhan Neotia said the chamber has suggested phasing out the MAT “once all the incentives and allowances are reduced”.
With demand conditions remain subdued, the industry bodies said the forthcoming budget should step up public capital expenditure to boost economic activity. The CII recommended that capital expenditure on key projects in sectors such as roads, railways, irrigation and power be increased substantially.
Among other suggestions, CII said fiscal deficit should not be allowed to increase, as this would put pressure on interest rates, which have just started to soften. To make available additional revenue for productive purposes, it suggested the Centre to step up PSU disinvestment, reduce subsidy outgo with greater implementation of direct benefits transfer, staggering Pay Commission outgo and raising tax revenue through expansion of base.
Assocham president Sunil Kanoria said he has suggested that the tax regime should be improved along with ease of doing business. “We recommended measures such as easy access to capital for MSMEs and creation of start-up hubs. We hope that GST is introduced soon,” Kanoria said.
Exporters’ body FIEO recommended removing the inverted duty structure anomalies as it not only effects exports but also the manufacturing sector. “Service tax should be exempted for exports,” FIEO president SC Ralhan said.