Roadmap to cut corporate tax exemptions - Fusion - WeRIndia

Roadmap to phase out corporate tax exemptions

Roadmap to phase out corporate tax exemptions

In order to make the tax rates in India more competitive, government declared a complete roadmap yesterday to phase out corporate tax exemptions. Finance Minister Arun Jaitley in his budget speech stated that the corporate tax rates will be reduced to 25% from 30% in the coming four years. But, he said that this will be supplemented by an equivalent cut downs of exemptions and deductions to bring more clarity to tax laws.

The tax department yesterday in a statement said that the deductions for corporate and non-corporate tax payers would be phased out irrespective of their nature i.e. whether they are investment-linked, profit-linked or area-based.

Furthermore, if anybody wants to advance their TAN incentives, then the sunset date would not be allowed for them. If the incentives have no specific sunset date, then March 31, 2017 will become the sunset date for them. This should be used for either claiming benefits or for stating the event based on the provisions of Income Tax Act.

Also, no weighted deduction is allowed with effect from 1 April 2017. All the stakeholders can send their feedback to government on this roadmap in the next two weeks. Government proposes to bring these changes beginning from the coming budget.

Currently, tax holidays are given to different sectors. Some of them are: Power generation, telecom and distribution and transmission and special economic zones (SEZ). Moreover, the aspirant manufacturing units in the North-East regions are also enjoying tax holidays. That means, if anybody wants to setup manufacturing in these regions, they will be given tax holidays. Certain states that come under special category states such as Himachal Pradesh and Jammu and Kashmir are also given tax holidays.

As per the revenue predetermined statement in the budget, the main incentives that are given to the corporate sector are affecting the revenue. These include tax holidays and accelerated depreciation etc. Their revenue impact in the present fiscal is greater than Rs.62,000 crore.

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