Arun Jaitley may lower corporate tax in Budget: Deloitte

Posted By: PTI
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New Delhi,Jan 15: Finance Minister Arun Jaitley may address the transient pain of demonetisation by cutting corporate tax rates when he presents the Budget for 2017-18 in just over two weeks time. Jaitley in his second Budget speech in February 2015 had announced phasing out of tax incentives with effect from April 1, 2017 and reducing the corporate tax rate from 30 per cent to 25 per cent.

FM may lower corporate tax in Budget: Deloitte

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In a survey by Deloitte Touche Tohmatsu India LLP, commissioned on budget expectations of India Inc, 53 per cent of the respondents expect the corporate tax rate to be reduced this time. "Given the strict measures taken by the government in curbing black money, it may be the appropriate time to reduce the tax rate," Deloitte noted.

Corporate tax accounted for a little less than a fifth (19 per cent) of the government's receipts last fiscal whereas income tax receipts accounted for just 14 per cent of total receipts. "Since the demonetisation announcement, one of the major concerns has been around the deceleration of the growth momentum in the economy emanating from a decline in demand. This concern resonates in survey as well because 80 per cent of respondents think the government would unveil measures to counteract the negative impact on demand," it said.

Deloitte further said, 40 per cent of the respondents agree that complete phase-out of tax incentives is a good measure and will reduce litigation. An equal number of participants believe profit-linked tax incentives should continue for growth sectors like infrastructure. Interestingly, 15 per cent of the respondents agree that instead of phasing out incentives for infrastructure sector, it should continue in the form of investment-linked tax incentive.

"Considering that some tax incentives will continue, one of the most eligible sectors is the infrastructure sector since the higher tax cost will impact the common man," it said. A majority of respondents (66 per cent) think that the gains from demonetisation are likely to be focused on development expenditure so as to boost investment demand in he economy.

As much as 26 per cent of them are of view that the gains will be spread evenly across major expenditure areas as the government possibly tries to limit the fallout on various sectors, Deloitte said adding a 6 per cent think that the government can go in for increasing subsidy expenditure. "Therefore, the industry clearly continues to hope for policy measures that strengthen the pace of structural reforms," it said. (MORE) JD MBI ABI BAL

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