Corporate India cautious in welcoming DTC bill
Corporate India was cautious in its response to the Direct Taxes Code bill, welcoming the proposal to raise the exemption limit for individual tax payers, while expressing disappointment that corporate tax rates were not lowered to 25 percent.
The three leading industry associations, which cover almost the entire gamut of corporate India, said some provisions of the DTC, tabled in Parliament on Monday and proposed to be implemented from 1st April, 2012, were not in sync with international best practices.
"The proposed new direct tax code is a welcome move, but it has not gone far enough," said Ficci President Rajan Bharti Mittal.
The industry body said that average global corporate tax rate is around 25 per cent and it is imperative that in India also have a corporate tax rate of 25 percent.
"The marginal adjustment of fixing the rate at 30 percent is disappointing," Mittal said.
Further, the new income tax slabs that have been proposed provide application of maximum tax rate of 30 percent at income level of over Rs 10 lakh.
This is also not a major change as originally the maximum rate was proposed to be levied at income levels of over Rs 25 lakh, Ficci said.
Industry body Assocham complemented the UPA government and said that it would pave the way for equitable administration of direct taxes and address the concerns of industries.
"The revised DTC should have addressed concerns relating to capital gains tax as well as minimum alternate tax(MAT) as per anticipation of India Inc," Assocham President Swati Piramal said.
PHD Chamber said that the increase in proposed MAT on book profits from current rate of 18 percent to 20 percent will be regressive for companies. Companies have been demanding an abolition of MAT.
Making the tax rates a part of the code itself will be an appreciable move as it would provide stability to changing tax rates year after year, it said.
However, corporate tax rate of 30 per cent as proposed by the code will be of marginal relief for the corporates and the Chamber believes that it should be brought down to a level of 25 percent.
It said that the widened tax slabs will result in more disposable income in the hands of individuals.
"It will also inculcate more voluntary compliance amongst the tax payers which would ultimately lead to higher revenues for the government," the Chamber said.