Corporate tax rate could fall below 25%, says got official
19 December 2015
The upcoming Budget for 2016-17 will detail a roadmap for lowering corporate tax to 25 per cent from 30 per cent at present, economic affairs secretary Shaktikanta Das said, adding that once tax exemptions are done away, the government may bring corporate tax to levels below 25 per cent over a period.
He said the finance ministry will soon detail some major decisions, including steps to deal with stressed assets of public sector banks.
''Our (corporate) tax rates are higher. 30 per cent plus the surcharge and all that put together, the impact is about 34 per cent. It is much higher than the average of (corporate tax in other countries) of about 22-23 per cent. But our effective tax rate is 22.8-23 per cent, that is because of large number of exemptions which have been given…roadmap for phased reduction of corporate tax from 30 per cent to 25 per cent will be unfolded as part of Budget,'' he said.
''25 per cent is the current target. The effort is to move, over a period of time, to reduce it further,'' Das said.
"India remains attractive for domestic investors and has a simpler tax climate where there is less litigation. Decision to reduce corporate tax is a timely decision. It's a game changing decision," he added.
On the issue of scrapping the minimum alternate tax (MAT), the economic affairs secretary said no decision has been taken yet, adding that with a lower corporate tax the minimum alternate tax will become irrelevant.
''Minimum alternate tax is not particularly liked by industry and various other tax holders. Once we are able to reduce the (corporate) tax rate to 25 per cent, the MAT will become totally irrelevant,'' he said.
On the delay in tax reforms, Das said, the reforms are needed to achieve higher growth rate, adding that the Goods and Services Tax (GST) regime will be in place in the country sooner or later.
The centre and the states are administratively prepared for implementing GST and there is also no bar, technically at least, for introducing GST in the middle of the year even if the deadline of 1 April 2016 is missed, he pointed out.
Das said for India to continue its role as engine of global growth, skill development and improvement in agriculture output are necessary. ''India is the only economy growing above 7 per cent. Our target is to move to 9 per cent and try to exceed that,'' he said.
The finance ministry will soon detail some major decisions to deal with stressed assets of the banking sector, he said.
''Stressed assets of banks is an area of concern. In the coming few months, some major decisions will be taken to deal with that,'' Das said.
Commenting on the fiscal health of the government, Das said non-tax revenues are expected to exceed Budget estimates this fiscal on account of higher dividends and surplus transfer from the RBI.