Union Budget 2015-16: Corporate tax to be reduced by 5% to 25% in four years

The finance minister Arun Jaitley proposed to reduce corporate tax rate to 25 per cent in the the next four years from the present 30 per cent.

The government is eyeing Rs.4.7 lakh crore corporate tax revenue in 2015-16, Jaitley said adding that this will be a major boost to the industry.

The Indian economy has turned around dramatically in the last nine months with the real GDP growth expected to accelerate to 7.4 per cent making India the fastest growing large economy in the world, the finance minster said.

"We will rationalise and remove exemptions to eliminate tax disputes," Jaitley added.

Many corporates have been clamouring for a shift in corporate tax policy. They were demanding a slab structure in corporate tax by allowing them to pay 5 per cent, 10 per cent, 15 per cent tax in grades as per their income.

The slab system, they say, will not only help smaller companies save tax but help them in reporting incomes accurately, thus bringing more entities under the tax purview.

According to experts, India's corporate tax now comes to 33.99 per cent, including various surcharges over the base rate of 30 per cent.

This is higher than Asia's average corporate tax rate of 21.91 per cent in 2014, and a global average of 23.64 per cent.