Finance Minister Arun Jaitley will be under pressure to moderate tax rate for the industry which was promised a lower levy of 25 percent by the government three years ago, experts said.
With the US substantially cutting corporate tax, the minister will also need to keep India’s tax rate globally competitive, they added.
The industry is doubtful whether Jaitley would fulfill his promise of reducing the corporate tax rate from 30 percent to 25 percent over four years. However, it wants the minister to consider moderating it to at least 28 percent in the forthcoming Budget.
To be unveiled on February 1, it would be the last full Budget of the present NDA government.
In his Budget speech of 2015-16, Jaitley had said “a regime of exemptions has led to pressure groups, litigation, and loss of revenue. It also gives room for avoidable discretion. I, therefore, propose to reduce the rate of corporate tax from 30 percent to 25 percent over the next four years. This will lead to higher level of investment, higher growth, and more jobs.”
Not expecting Jaitley to cut the corporate tax rate to 25 percent in view of fiscal constraints, Ficci president Rashesh Shah said the minister should endeavor to bring it down to 28 percent.