Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Direct Tax »
Open DEMAT Account in 24 hrs
 CBDT drops small tax demands but not TCS, TDS claims
 ITR Refund: Awaiting money from Income Tax? Here's why you have not yet received your amount
 Income Tax Notice: What to do if you receive a Section 143 (1) notice from taxman?
 Average tax return processing time cut to 10 days: CBDT
 7 types of Income Tax Notice ITR filers may receive for AY 2023-24
 ITR filing: Do these advance preparations before filing your income tax return
 What are the strategies to maximize tax refunds after submitting an income tax return (ITR)?
 ITR filing: Tax rules on income from house property that your should know
 CBDT likely to issue rules on angel tax next week
 Pension Taxation: Everything you need to know for ITR filing
 Income tax guide on pension: How to file pension income in ITR?

Removing clutter in direct tax code will lower tax rates
October, 12th 2015

The Economic Times on October 10 reported that the Narendra Modi government plans to simplify the direct tax code by pruning tax exemptions. If the government does act on this plan, it would have a positive impact on the economy as a tax code cluttered with exemptions results in economic distortions, encourages companies to lobby the government for more exemptions and keeps the headline tax rate high.

The aim of direct tax reforms has been to simplify the code by removing exemptions. One measure of the cost borne by the economy on account of tax exemptions is provided by a statement in the budget which details the extent of revenue foregone.

For instance, in 2013-14, revenue foregone on account of exemptions for corporates was Rs 57,793 crore.
The fallout of these exemptions nudged finance minister Arun Jaitley to promise reforms in the direct tax code. In his last budget speech, he laid out a roadmap of the reform path.

“The basic rate of corporate tax in India at 30% is higher than the rates prevalent in the other major Asian economies, making our domestic industry non-competitive. Moreover, the effective collection of corporate tax is about 23%. We lose out on both counts, i.e. we are considered as having a high corporate tax regime but we do not get that tax due to excessive exemptions.

A regime of exemptions has led to pressure groups, litigation and loss of revenue. It also gives room for avoidable discretion. I, therefore, propose to reduce the rate of corporate tax from 30% to 25% over the next 4 years. This will lead to higher level of investment, higher growth and more jobs. This process of reduction has to be necessarily accompanied by rationalization and removal of various kinds of tax exemptions and incentives for corporate taxpayers, which incidentally account for a large number of tax disputes,” said Jaitley.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting