India unveils road map to lower corporate tax to 25%; plan to bring rate closer to international levels
NEW DELHI: India has unveiled the details of an ambitious reform plan to rid its income tax law of exemptions and lower the corporate tax rate to 25% from 30% now, bringing it closer to international levels.
Tax holidays for special economic zones and units in such areas, infrastructure facilities, and commercial production of natural gas and mineral oil having no end date for commencement of operations, will sunset on March 31, 2017, as per the plan. Weighted deduction from taxable income for specified sectors including affordable housing, cold chains, warehousing and gas pipelines will also be off from April 1, 2017. The highest rate of depreciation is proposed to be cut to 60% from 100%.
Though corporate tax is 30% at present, the effective rate is much lower at 23% because of incentives.
In 2014-15, the government is estimated to have foregone Rs 62,400 crore in corporate taxes on account of various incentives, up from Rs 57,800 crore a year earlier. “This is a step towards simplification of tax laws, which is expected to bring about transparency and clarity,” the Central Board of Direct Taxes, the apex direct taxes body, said on Friday.
The plan, as promised by Finance Minister Arun Jaitley in his budget speech, aims to declutter the income tax law that has been laden with tax exemptions leading to a rise in abuse and tax disputes. The minister had also assured to reduce the corporate tax rate to 25% from 30% over the next four years.
In his February budget speech, Jaitley had said: “A regime of exemptions has led to pressure groups, litigation and loss of revenue. It also gives room for avoidable discretion.”
Read full article: Economic Times
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