New Delhi, Jan 5: Industry chambers will push for simplification of Income Tax laws and calibrated phasing out of exemptions after lowering of corporate tax rate during their meeting tomorrow with Finance Minister Arun Jaitley.
They will also press for effective steps and policy actions to improve ease of doing business with a view to promote growth.
In their pre-budget consultation with Jaitley tomorrow, industry chamber CII is likely to demand lowering of corporate tax rate to near 20 per cent, as against the intention of the government to bring it down to 25 per cent from the present 30 per cent in the next four years.
Assocham is likely to pitch for addressing policy gaps in existing provisions and enacting specific provisions to deal with key issues. Besides, it also wants the government to ensure that fine-print does not undermine policy objectives and there is consistency in interpretation.
The industry chamber is of the view that several existing provisions of the Act leave significant questions of policy (both substantive as well as procedural) unaddressed which lead to extensive litigation. "Addressing such gaps through suitable legislative amendments in the Act will go a long way in minimising litigation and providing certainty to taxpayers," Assocham said.
CII has already asked Revenue Secretary Hasmukh Adhia to consult the industry before the finalising the corporate tax roadmap phase out. "With exemptions being proposed to be done away with, this would also obviate the need of MAT.
Eventually, there should be a very simple Income Tax Act, which would be the biggest reform that can be brought about by the Government," the CII has said. Jaitley had in 2015-16 Budget had announced that corporate tax rate would be brought down gradually to 25 per cent over the next four years and exemptions would be phased out.
Although the current corporate tax rate is 30 per cent, the effective rate comes to around 22 per cent because there are a large number of exemptions.
Accordingly, the revenue department had in November unveiled the draft roadmap for phasing out of exemption and invited public comments on the same. Besides, the government has already set up a high-level committee under a former Delhi High Court judge to suggest simplification of Income Tax laws.
The committee would submit its preliminary report by January 31, just in time for incorporating suggestions that need legislative approval in the Budget for 2016-17. Revenue Secretary Hasmukh Adhia had earlier said that major cause of large-scale litigations is various exemptions and deductions given under the existing income tax law.
"We have already announced a roadmap for phasing out of such incentives over a period. When such exemptions are removed and tax law is simplified, the litigations would come down further," Adhia had said.