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FICCI demands across the board Income Tax rate cut in 2018-19 budget
Dec 06, 2017
New Delhi, 6 December 2017: FICCI has suggested Finance Minister Mr. Arun Jaitley to consider across the board tax rate cuts for businesses and individuals in the Budget for 2018-19 to spur domestic investment and demand.
FICCI President Mr Pankaj R. Patel said at the pre-budget meeting with the industry, convened by the finance ministry, this move will help in retaining India's overall competitive environment globally.
FICCI stressed that many key
global economies were opting for significant rate cuts -- for instance, the US
is on the verge of historic tax reform that proposes to cut the corporate tax
rate from a top rate of 35% to 20% as well as provide relief to individuals - and
this approach should also be followed by India.
Although a roadmap for bringing down corporate tax rates to 25% was laid out in earlier budget, this is not yet implemented across the board. FICCI president also stressed on the need to consider the impact of the Dividend Distribution Tax and the Buyback Tax.
"Together with the basic
corporate income tax, this pushes India's overall tax rate for companies well
beyond 40%, which is quite high," he said.
Other measures suggested by
FICCI at the meeting, also attended by senior finance ministry officials,
includes convergence of the Goods and Services Tax (GST) rates to 3 - 4
and inclusion of all excluded items till date, along with
simplification of the compliance mechanism and removal of the applicability
of GST on Intra-entity transfer of services within the same legal
entity.
FICCI also pointed out that
there is a need for clarity on Anti-profiteering provisions under
GST, specifically related to its applicability at product or entity level,
examination at State or Central level, applicability on products/ stocks prior
to GST, etc.
Such clarity is important as
there can be penal consequences if the taxpayer is found not complying with
these obligations. Furthermore, the taxpayer should not be made liable to
follow such guidelines retrospectively.
While welcoming the enactment
of Insolvency and Bankruptcy Code, 2016 (IBC), FICCI also feels that tax
considerations are important for successful implementation of insolvency
schemes and tax provisions should not be a deterrent in achieving the policy
objectives of IBC. In this regard, there is a need to exempt levy of
Minimum Alternate Tax (MAT) on write back of notional income pursuant
to approved plan of IBC.
Urging the government to
continue its focus on productive expenditure (infrastructure
capex), FICCI said if this requires relaxation of fiscal deficit target, it
should be considered. (If required, Fiscal
Deficit up to 3.5% of GDP can be considered).