NEW DELHI: The Confederation of Indian Industry (CII) urged the government on Monday to cut the corporate tax rate to 25 per cent from the current range above 30pc when its budget for the year ending March 31, 2020 is presented next month.
It also called on the administration of Prime Minister Narendra Modi, who is just starting his second term after a landslide election victory, to introduce other tax incentives to boost India’s sagging economy.
Economic growth slipped to 5.8pc, its lowest rate for more than four years, in the January-March quarter, adding to pressures for fiscal stimulus from the government and a rate cut by the central bank.
In 2015, the government had promised to cut corporate tax rates and roll back tax exemptions over a period of four years, but only small companies obtained tax relief.
Industrialists said other major economies, including the United States and several Asian countries, have reduced their corporate tax rates to a 16-25pc range. They argue that by comparison, India’s rates – which run from 32-35pc depending on the size of a company’s sales – damage the competitiveness of Indian firms.
A Finance Ministry spokesman declined comment on the industry group’s appeal, saying budget decisions were not public yet.
New Finance Minister Nirmala Sitharaman, who will present her first budget on July 5, is under pressure to announce tax incentives for individual taxpayers and corporations to boost consumer demand and investments.
Finance ministry officials have, however, cautioned against any large-scale stimulus, citing fiscal constraints due to slower growth in tax receipts.
“The first 100 days of the new government would be an opportunity to set the direction and pace of a reform agenda for the country over the next five years,” CII President Vikram Kirloskar said after presenting its wishlist to the government.
Published in Dawn, June 4th, 2019