India Inc Tuesday made a case for reduction in corporate tax rate, abolition of minimum alternate tax, halving dividend distribution tax to 10 per cent and increase in outlay for infrastructure sector in the upcoming Budget with a view to arrest economic slowdown.
Representatives of industry chambers made these suggestions during their customary pre-budget consultation with Finance Minister Nirmala Sitharaman, who on her part, recalled the steps taken by the government since 2014 to improve the country's business climate. Sitharaman will present the first Budget of the Modi 2.0 government on July 5.
In the meeting, CII President Vikram Kirloskar suggested bringing down the dividend distribution tax to 10 per cent from the present 20 per cent, saying it should also be not taxed at the hands of the investor.
In her opening remarks, Sitharaman said since 2014 the government has taken measures to simplify and rationalise existing rules and introduced Information Technology in a big way to make governance more efficient and effective.
As a result, she added, India has considerably improved its ranking to 77th position among the 190 countries and has kept 23 ranks over its rank of 100 in the Doing Business Report 2018 as per the World Bank Doing Business Report, 2019.
Sitharaman also said that industry should accommodate more work force to reap the benefits of demographic dividend.
Among other things, Assocham President B K Goenka recommended that 100 per cent depreciation should be permitted in the first year of investment for all new investments.
"In order to further simplify GST, we propose a dual rate (8% & 16%) structure for GST'," Goenka said.
Suggesting upward revision of the income tax slabs for individuals, Ficci demanded that the highest tax rate of 30 per cent should be applicable only for income above Rs 20 lakh. It also sought reduction corporate tax rate to 25 per cent. Indian businesses are bearing high tax cost as corporate tax rate along with dividend distribution tax pushes India's overall tax rate for companies beyond 50 per cent, which is quite high.
With a view to give boost to Indian economy, industry representatives submitted several suggestions with regard to land reforms, special economic zones, industrial policy, investment in research and development, simplification of tax regimes, tapping potential in tourism sector, Foreign Direct Investment (FDI), Goods and Services Tax (GST), Capital Gains Tax, Corporate Tax, among others.
CII President suggested that a simplified taxation regime is pivotal for improving the revenue flows and help government stick to fiscal prudence without crowding-out private investments.
"For this to fructify, a timeline for a Taxation regime (Direct Tax) needs to be announced where the highest rate should be 18 per cent, in addition to removing all exemptions and not doing grandfathering," Kirloskar said.
Ficci President Sandip Somany suggested that to provide a major fillip to infrastructure sector, the government must announce a few major projects in sectors such as roads and highways, sub-urban metros and airports.