Government of India should take steps for reducing direct taxes in the hands of individuals than reducing corporate tax. The reasons are:
Reduction in taxes will result in more cash in the hands of the individuals and this will result in any of the following:
1. Augmenting savings. Savings can be used by GOI for developmental projects
2. Increase in purchases say household articles and luxury items. This will result in increased production which in turn will augment profitability of the Corporates.
3. With increased profits, corporates after paying taxes can either retain the residual number either for further expansion or declare dividends.
4. Increased business for corporates means increase in taxes for GOI, increase in taxes means reduction in deficit which in turn increases the purchasing power of rupee. Increase in purchasing power of rupee results in rupee becomes stronger against foreign currency. Rupee becoming stronger will reduce our import bill thereby improving our balance of payments.
5. All big corporates are having public holding. Corporates in a way are managing the public funds for the welfare of the country ultimately. For corporate expansion, corporates can either resort to public or banks.
6. On reduction in taxes, public can definetly support the IPO and meeting the needs of the corporates.
It is better to reduce the burder of taxes on individuals than corporates.
Regards
CAclubindia
