Government unveils roadmap to phase out corporate tax exemptions
Preparing the ground for gradual reduction of corporate tax rate to 25% from the current 30%, the government on Friday proposed a roadmap for ending various tax exemptions currently enjoyed by the industry.business Updated: Nov 20, 2015 23:37 IST
Preparing the ground for gradual reduction of corporate tax rate to 25% from the current 30%, the government on Friday proposed a roadmap for ending various tax exemptions currently enjoyed by the industry.
The announcement to phase out corporate tax was made by finance minister Arun Jaitley in the budget.
According to the proposals of the Central Board of Direct Taxes (CBDT), the sunset clauses with regard to tax exemption and phasing out of investment-linked and area-based deductions will not be extended.
“In case of tax incentives with no terminal date, a sunset date of March 31, 2017 will be provided either for commencement of the activity or for claim of benefit depending upon the structure of the relevant provisions of the (Income Tax) Act.”
The CBDT has invited comments on the proposals, which once accepted, will come as amendments in the I-T Act.
The rationale cited by Jaitley to phase out exemptions was that even though the basic rate of corporate tax is 30%, the effective one is much lower at 23% because of incentives.
Experts, meanwhile, have sought more clarity.
“The issue of the sunset date needs more clarity in the sense that where a project commences on or before March 31, 2017 the incomes beyond that from such activity or project should continue to be exempt for the period envisaged in the exemption,” said Ketan Dalal, senior tax partner, PwC India.