India Inc, which was expecting the Finance Minister to deliver a dream Budget, will probably have to settle with a forward looking Budget instead.
The decision to bring down the corporate tax from 30 per cent to 25 per cent over the next four years will not only make Indian companies competitive in the global markets, but also make India an attractive destination for investments.
“The Government has made efforts to move towards a more simplified tax structure by announcing a plan to rationalise direct tax regime for corporates involving both a reduction in the corporate tax rate from 30 per cent to 25 per cent over the next four years as well as elimination of exemptions. This should help align our corporate tax structure in line with that of our Asean neighbours,” said Jyotsna Suri, President, FICCI
India’s corporate tax was considered to be high compared to other competing countries.
For example, the corporate tax in China and Malaysia is already at 25 per cent.
In Hong Kong and Singapore, it is around 17 per cent. A higher tax rate makes the cost of doing business in India significantly high.
Harsh Pati Singhania, Director JK Organisation and Vice-Chairman & MD JK Paper Ltd, said that the reduction will boost investments and job creation.
“There has been a concerted effort to improve the ease of doing business that will complement the measures taken over the last nine months. India Inc has been eagerly awaiting the introduction of GST and the FM has utilised the Budget to outline a clear roadmap on GST, with the central excise and service tax rationalised towards that end,” he said.
Krish Iyer, President & CEO, Walmart India, said the roadmap to reduction in corporate tax, at the same time removing plethora of exemptions, which led to complexity & litigation, is a welcome step towards simplification and will also be received well by all investors.
Kamlesh Rao, CEO, Kotak Securities, said that the move to lower corporate taxes over a four-year horizon shows the government’s long range vision of a resurgent India.
“On similar lines, the government showed intent on infrastructure at the cost of a slightly higher fiscal deficit, with priorities in rail, road and irrigation,” he said.
Onkar S Kanwar, Chairman, Apollo Tyres, said that the reduction is a huge positive, as it will provide yet another fillip to the ‘Make in India’ story.