Budget 2016-17: Industry seeks clear roadmap for reduction in corporate tax rate
India Inc on Wednesday pressed for a clear roadmap for reduction in corporate tax rate from 30 percent to 25 percent in the forthcoming Budget.
New Delhi: India Inc on Wednesday pressed for a clear roadmap for reduction in corporate tax rate from 30 percent to 25 percent in the forthcoming Budget.
The industry chambers including CII and Ficci also suggested that the withdrawal of incentives should be in tandem with the reduction in corporate tax rate besides removal of minimum alternate tax (MAT).
"As far as taxation is concerned, we have asked for a clear roadmap on the 25 percent (corporate tax)... We are totally in support of removal of incentives and allowances," CII President Sumit Mazumder said after the pre-Budget consultation meeting with Finance Minister Arun Jaitley.
Sharing similar view, Ficci President Harshavardhan Neotia said the chamber has suggested phasing out the MAT "once all the incentives and allowances are reduced".
He said that Ficci also recommended continuation of investments in public sector.
On Goods and Services Tax (GST), he said the industry bodies reiterated their commitment that "we stand by the government and support the government for its implementation".
"He (the Finance Minister) did refer to it obliquely (in the meeting)...it will happen soon," Neotia said, adding that the industry has not lost hope on this. IT industry body Nasscom too suggested certain tax related matters for start-ups.
Nasscom President R Chandrashekhar said that it has suggested on the mitigation of tax liabilities particularly taxes which are taken upfront.
"...because most of the start-ups in the initial stage do not actually have too much of revenue and even less in terms of profits," he told reporters here after the meeting.
"The discussions with the Finance Minister were on issues related to start-ups, e-commerce and Internet and mobile companies. We are having a separate discussion with the Finance Minister tomorrow," Chandrashekhar said.
He said domestic investors are taxed today at a higher rate than non-resident investors and this is certainly an anomaly which has to be addressed in the Budget.
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," he said.
Exporters' body FIEO recommended removing the inverted duty structure anomalies in the Union Budget as it not only effects exports but also the manufacturing sector.
"We have demanded that for the exporting community, service tax should be exempted for exports," FIEO President S C Ralhan.
On fiscal management, Ficci has suggested stepping up investments, particularly in infrastructure.
"For this if we need to recalibrate the fiscal deficit target a bit, then we must go ahead with the same," Neotia said, adding that there is a need to widen the tax base.
All incomes irrespective of the source above a certain threshold need to be taxed and to ensure that there is no tax evasion, the government should consider making filing of returns and declaration of all incomes mandatory over a particular threshold, say Rs 10 lakhs, he said.
To achieve 'Housing for All' target and promote affordable housing, the government should consider providing 3 percent interest rate subvention for loan taken up to Rs 10 lakhs. Stamp duty exemption may also be provided for such dwellings, he added.
Ficci also recommended steps to overhaul the tax administration and dispute resolution machinery.
"Give up the policy of setting tax collection and revenue targets for tax officers, since tax collections vary with the economic cycle and business conditions," he said. CII too recommend that capital expenditure on key projects in sectors such as roads, railways, irrigation and power be increased substantially.
To push rural demand, CII asked for increase in allocation on schemes such as the Pradhan Mantri Gram Sadak Yojana and the Pradhan Mantri Krishi Seenchayi Yojana.
"With greater implementation of direct benefits transfer, the fuel subsidy bill can be steadily reduced. Fertiliser subsidy should be paid directly to farmers as cash transfers," CII President Mazumder said.
The phase out of incentives is important for broadening the tax base and for simplification of tax law, he said.
"The withdrawal of incentives should be done in a calibrated manner, in line with the reduction in tax rate and keeping in mind the competitiveness of the sector. The MAT should also be withdrawn in a calibrated manner," he added.