Companies are expected to breathe a bit easy as statutory tax rates on them are likely to be reduced by 3% in the Budget either through abolition of 10% surcharge or reduction of corporate tax from the current level of 30%.
Either corporate tax rate is likely to be reduced to 27% or surcharge abolished to give 3% relief to companies, sources said.
The statutory rate of taxes on companies stands at about 33.66% with corporate tax of 30% and surcharge of 10% along with education cess of 2%. Corporates are demanding around 5% cut in taxes, but it is not likely to be accepted entirely, sources said adding the cut may be limited to 3% only.
Companies in India are given a host of tax exemptions. These include tax holiday for software technology parks, EoUs, infrastructure service providers and units set up in backward areas. Because of all these exemptions, effective rate of taxation on corporates works out to be much lower.
The government collected close to 50% more corporate tax at Rs 97,315 crore during the first 10 months of this fiscal against Rs 65,094 crore during April-January of the previous fiscal.