Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TDS :: articles on VAT and GST in India :: empanelment :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: form 3cd :: ACCOUNTING STANDARD :: cpt :: due date for vat payment :: list of goods taxed at 4% :: VAT RATES :: VAT Audit
 
 
« News Headlines »
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government
 Deadline to pay property tax in old currency extended
 Cabinet clears amendments to Income Tax Act
 Have you got interest on your income tax refund?

FICCI suggests lower taxes
March, 31st 2009

A Ficci-PwC joint study concludes that big corporates pay over 35% of their profits as taxes, and has argued for a substantial cut in taxes. The government has, on the other hand, argued in the past that the tax system is riddled with subsidy payments to preferred taxpayers including corporates.

The effective average corporate tax rate, it claimed in 2008-09 budget, was only 20.6% against the statutory tax rate of 33.66%. How can the governments version vary so much from that of the Ficci-PwC study? The study includes what it calls business taxes taxes other than corporate ones such as stamp duty and direct taxes like dividend distribution tax that are a charge on the profit & loss account that a corporate pays to the government while calculating the total tax rate.

These levies, finds the study, are about 40% of corporate taxes and take the average total tax rate to nearly 36% for the sample of 41 large companies. The government has gone for a simpler measure of corporate taxes as percentage of pre-tax profits to underscore the low effective rate of taxation.

The 20.6% effective tax rate is, however, a sweeping average of over three lakh companies that include those with high effective tax rate, with fewer exemptions.

Clearly, the picture is one of a complex tax structure and cumbersome administration. Corporates would point to the plethora of taxes and contributions, which also increase administrative costs. (World Banks 181-country Doing Business survey ranks India a poor 169 on the paying taxes parameter.)

The government could easily argue that the large number of exemptions, deduction, rebates, credits and special rates, make corporate tax planning (in certain cases even evasion) that much easier for companies. It reckons that the revenue foregone because of various exemptions could be as much as Rs 2,78,644 crore in 2007-08, nearly 50% of gross tax collection that year.

A complex regime and high taxation could well be the reason why many small and medium companies operate in the informal sector even as it denies them the many benefits of operating in the formal economy, including access to cheaper credit. Clearly, there is a case for a cleaner taxation regime for a more informed debate on corporate taxation.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Customer relationship management software CRM software Operational CRM Collaborative CRM

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions