PC lays on super-cess shocker for India inc
Finance minister P Chidambaram\'s proposal on the corporate tax front has not been well received by India Inc, with the hike in surcharge coming as a shock to them.
The surcharge on domestic companies whose taxable income exceeds R10 crore has been increased to 10% from 5%. Foreign companies with taxable income exceeding R10 crore will shell out 5% as surcharge against 2% earlier.
“Tax on the super-rich was perhaps a compulsion on the part of the FM to raise additional revenue to address fiscal deficit. However, the increase of surcharge by almost 100% on Indian as well as foreign companies may not go down well with the corporate sector,” said Sanjay Sanghvi, partner at legal advisory firm c.
Budget 2013 proposes to extend the concessional tax rate of 15% on dividend received from a foreign subsidiary company for the 2014 fiscal. Similarly, dividends distributed by foreign subsidiaries to their parent Indian firms will not come under the dividend distribution tax (DDT) net.
“The proposal to do away with DDT for dividends received by Indian firms from their foreign subsidiaries is beneficial for companies with significant overseas operation. This cascading effect, which was earlier only for domestic subsidiaries, is now going to be available for the foreign ones as well. So there is an alignment of both which is positive,” said Subramaniam Krishnan, partner, financial services & taxation at consulting and audit firm Ernst & Young. “The surcharge hike means more cash outflow for companies. But the FM wanted to widen his tax collection
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