Employees use press punches to cut lock components at a Prabha Brasshands International factory in the Tala Nagri Industrial Area of Aligarh, Uttar Pradesh, India (Photographer: Udit Kulshrestha/Bloomberg)  

Industry Demands Cut In Corporate Tax Rate In Pre-Budget Meeting

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Summary
  • Assocham, Ficci seek reduction in corporate tax rate to 25 percent from 30 percent
  • CII suggests lowering corporate tax to 18 percent and removal of all exemptions, cesses and surcharges
  • CII suggests permitting banks to reissue recap bonds to institutional investors, retail investors
  • The industry body seeks rationalising 12 percent and 18 percent GST rates
  • Exporters demand exempting export income from income tax for five years

Industry bodies today sought a cut in the corporate tax rate from the current 30 percent in a pre-budget consultation meeting with Finance Minister Arun Jaitley.

The Confederation of Indian Industry asked the government to lower corporate tax to 18 percent and withdraw tax incentives, exemptions, surcharges and cesses. Other associations – Federation of Indian Chambers of Commerce and Industry and Assocham – have sought reduction of corporate tax to 25 percent.

“If we see corporate taxes across the world, the trend is that people are reducing corporate taxes. India is among the highest,” CII President Shobhana Kamineni told reporters in New Delhi after the meeting.

CII has also suggested a reduction in personal income tax rates by increasing the exemption threshold to augment demand in the economy.

Strengthen Banking Sector

Industry bodies have also asked the government to permit public sector banks to reissue recapitalisation bonds to institutional and retail investors, said Kamineni. This would allow banks to raise another Rs 1.35 lakh crore, she added.

The government has announced a Rs 2.11 lakh crore recapitalisation package for public sector banks, out of which Rs 1.35 lakh crore would be raised through recapitalisation bonds.

CII also suggested lowering government's stakes to 52 percent, and then subsequently to 33 percent, to increase efficiency to strengthen the Indian banking system.

Ficci suggested privatising state-owned banks, and consolidating them to create five to six large banks.

Also Read: Farmers’ Body Demands Income Security In Pre-Budget Meeting

Converge GST Rates

Besides, a suggestion was also made to converge Goods and Services Tax rates, keeping demerit goods in the 28 percent tax slab

Items of mass consumption should be taxed in the range of 12-18 percent, while goods used by the poor should be exempt or taxed at 5 percent, said CII.

Ficci pitched for simplification of compliance-related procedures under GST.

Electricity, natural gas and diesel should be included under GST, Assocham suggested. It also recommended increasing import duties on steel, aluminum, copper and zinc to help domestic companies.

Exporters Seek Income Tax Exemption

Exporters sought income tax exemption for exported goods for five years, saying the tax thus saved can be used to retain their businesses and make domestic exports more competitive, Engineering Exports Promotion Council said in a statement. The body has also asked for lower tax rate for export earnings, EEPC board member PK Shah told reporters.

Pending GST refunds of exporters with the government is estimated around Rs 60,000-70,000 crore, Shah said.

The government, in a recent notification, said that pending refunds claimed by exporters were around Rs 6,500 crore in the first four months of GST, and any delay or rejection was due to errors in filing returns.

Also Read: Too Early To Comment On Distribution Of Taxes Between States, Centre: NK Singh

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