Industry chambers pitch for corporate, income tax rate cut

As the finance ministry starts preparations for the presentation of the Union Budget 2019-20 by the new government, industry chambers have pitched for a reduction in corporate tax and income tax to boost investment and consumption and spur economic growth.

The Budget is likely to be presented in July.

"Effective corporate tax on distributed profit is over 48%. There is a need to reduce it to 25% and gradually to 20%," a delegation led by Rahul Garg of Associated Chambers of Commerce & Industry (Assocham) told revenue secretary A B Pandey during a pre-Budget meeting on Thursday.

Confederation of Indian Industry (CII) too has demanded lowering of taxes saying that the country has one of the highest tax burden. "A lower tax is the need of the hour for growth and investment. In addition to corporate tax and dividend distribution tax (DDT), minimum alternate tax (MAT) is also levied," Chandrajit Banerjee, director general of CII told the finance ministry officials earlier this week. The industry chamber also asked the government to consider announcing a roadmap for tax policy over the next five years to attract investments.

"Long Term Capital Gains (LTCG) on equities and MAT should be removed. Apart from this, DDT should be rationalised to 10% and should be taxed at the hands of the recipient," CII said in a presentation before the finance ministry.

Federation of Indian Chambers of Commerce and Industry (FICCI) too batted for lower corporate tax rate and income tax in a pre-Budget meeting with the government earlier. The industry chamber demanded that the highest tax rate of 30% should be levied on annual income above Rs 20 lakh as against the current limit of Rs 10 lakh.

Meanwhile, the industry associations have favoured continuation of exemption for individuals with an annual income of up to Rs 5 lakh from income tax. Apart from it, "the investment limit under section 80C and section 80D, and deduction for interest paid on housing loan under section 24 should be enhanced," Ficci told the finance ministry officials in during the pre-Budget meeting.

The pre-Budget meetings with the officials are likely to continue until June 5. The revenue secretary along with chairmen of Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes and Customs (CBIC) has held a series of meetings with industry associations. The delegations of micro, small and medium enterprises (MSMEs) and agriculture sector are also likely to submit their proposals related to taxation soon.

As part of the preparations for the Budget, the finance ministry had earlier sent out communications to the industry bodies inviting their suggestions on direct and indirect taxes related to various sectors.