Budget 2018: With the Union Budget 2018 just two days away, a survey conducted by Deloitte finds that more half of the professionals expect a 5% cut in corporate tax to 25 per cent in the upcoming budget. While experts are pegging that the Budget is going to be focused on rural population, corporate India is also continuously putting forward its demand of lower corporate tax rate, which was promised by Arun Jaitley in his first full year Budget.
According to the survey by Deloitte covering 120 professionals across sectors, close to 50 per cent feel that tax reforms, particularly tax litigation, should be the most critical priority for the government. “Half of the survey respondents (50 per cent) expect corporate tax rate to be reduced to 25 per cent from 30 now to all companies as was committed earlier,” the survey said.
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Given the strict measures taken by government around curbing black money, it may be the appropriate time to reduce the tax rate,” it added. Earlier, a report by HDFC Securities had pointed out that Finance Minister Arun Jaitley could cut the corporate tax rate.
“On the corporate level Corporate tax rate may be cut to 25% for companies with annual sales of upto Rs.200 crore (vs Rs.50 crore earlier) (Realistically, a step-down in the corporate tax rate may be introduced only in conjunction with paring of exemptions, to maintain revenue neutrality), Corporate tax rate on insurance companies may be hiked gradually from the current 12.5%+SC over few years to match with the normal corporate tax rate, IBC cases – clarification/legislation expected on treatment of tax including MAT on writebacks,” HDFC Securities said in a note.
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Apart from corporate tax cut, analysts also expect rationalisation of Minimum Alternate Tax. “The purpose behind the introduction of MAT was to bring all zero tax companies within the tax net and to neutralize the impact of certain excessive benefits/incentives. MAT had started at around 7.5% in 2000. the present MAT rate of 18.5%, which comes to around 20% including surcharge, cess, etc. seems very high as compared to the expected reduced corporate tax rate of 25% coupled with the planned phase out of exemptions,” PHDCCI said in a note. FICCI said that for businesses, especially the smaller ones, to have relief truly meaningful, MAT should be reduced or reviewed.