NEW DELHI: The Associated Chambers of Commerce and Industry of India (Assocham) on Wednesday asked the Finance Ministry to reduce corporate tax to 25 per cent from the existing rate of 30 per cent so that the industry is left with more money to make big-ticket investments.
“Assocham has recommended reduction in the corporate tax from 30 per cent to 25 per cent.
“This will result in generating more surpluses in the hands of companies, with the consequential impact on investments and growth,” the chamber said in a pre-Budget memorandum to Finance Minister Pranab Mukherjee.
The chamber said a liberalised taxation regime had been a long-pending demand of the corporate sector.
It said reduction in the corporate tax rate to 25 per cent would bring the tax regime on a par with that of developed Western nations and make the country's corporate sector more competitive globally.
“... To be a competitive and attractive investment destination, our tax rates must be in tune with others. The trend world-over has thus been to gradually bring down corporate tax rates,” Assocham said.
It also termed Minimum Alternate Tax (MAT) “redundant” and called for its abolition.
In the same vein, the chamber also said that if MAT could not be abolished, the rate should be reduced from close to 20 per cent at present to 15 per cent. MAT is a tax levied on profit-making companies that do not fall under the tax net because of exemptions. With various exemptions phased out over the years, Assocham said MAT had become redundant.
“Assocham has suggested abolition of MAT, or alternatively, restricting it to a maximum 15 per cent as against 19.93 per cent, or be levied only on book profits,” it said. — PTI