India’s income tax structure does not discriminate against foreign companies although the basic rate for such outfits may seem higher than the domestic ones, said Revenue Secretary Shaktikanta Das.
“Let there be no feeling that the tax structure is discriminatory against foreign companies,” Das said at an international tax conference organised by the PHD Chamber of Commerce and Industry (PHDCCI) here on Friday.
He pointed out that foreign companies are not subject to the dividend distribution tax (DDT), while the domestic companies have to fork out DDT (15 per cent) in addition to corporate tax, which comes at a basic rate of 30 per cent.
Das was responding to a suggestion made by Anil Kumar Chopra, Chairman of PHDCCI’s Direct Taxes Committee, that the basic tax rate of 40 per cent specified for foreign companies need to be reduced to improve India’s competitiveness.
Although there are several benefits in locating businesses in India, many foreign companies are tempted to register in jurisdictions such as Singapore given the lower tax rates there, Chopra said.
India plans to lower the basic corporate tax rate to 25 per cent from 30 per cent in four years. This rate reduction is expected to apply only to domestic companies.