India Inc on Wednesday sought a reduction in the corporate tax rate and easier compliance norms for the Goods and Services Tax (GST) at a pre-Budget meeting with Finance Minister Arun Jaitley.
“We have suggested that the corporate tax rate be lowered to 18 per cent along with removal of all tax incentives and surcharges and cesses, as this will lower the tax burden on firms and also make the country more attractive to investors,” said Shobana Kamineni, President, CII.
The issue was also raised by industry body FICCI, which pointed out that the US is also on the verge of reducing the corporate tax rate from a top rate of 35 per cent to 20 per cent and providing relief to individuals.
“Although a roadmap for bringing down corporate tax rates to 25 per cent was laid out in the earlier Budget, this has not yet been implemented across the board,” said Pankaj Patel, President, FICCI.
Assocham President Sandeep Jajodia said the industry body has asked for corporate tax to be reduced to 25 per cent, in line with developed and industrialised nations, as it will help attract investments and create jobs.
“Dividend distribution tax, which is around 20 per cent, should also be lower,” he said.
‘Invest more’The Finance Minister urged companies to invest more in the infrastructure sector and said that private investments, along with public and foreign investments, are key to boosting growth and creating job opportunities.
“The government has taken various steps and has also set up a National Investment and Infrastructure Fund to boost investment in this sector,” he said.
This was the third pre-Budget meeting held by the Minister, who, later in the day, also met social sector representatives, including trade union leaders, for their inputs.
Meanwhile, exporters, still facing problems of blocked working capital, sought exemption from tax on export income, lower rates on forex earnings, and faster clearance of GST refunds.
“We called for exemption from IGST on all instruments providing basic Customs duty-free imports, both on inputs and capital goods,” said Ganesh Kumar Gupta, President, FIEO. He said the federation also proposed a comprehensive Duty Drawback Scheme that would cover the incidence of both basic Customs duty and input tax credit.
Meanwhile, CII has also called for rationalisation of GST into four rates — 5 per cent, 12 per cent, 18 per cent and 28 per cent — as well as inclusion of sectors such as petroleum, alcohol and real estate within the ambit of the new levy.
This is the first Union Budget after the rollout of GST on July 1 this year. It is expected to be tabled in Parliament on February 1.
In Budget 2015-16, Jaitley had announced a gradual lowering of the corporate tax rate to 25 per cent over the next four years, along with an elimination of exemptions.
He has already cut the tax rate for new manufacturing companies that do not utilise any exemption, and firms with an annual turnover of less than ₹50 crore.