Cut corporate tax, abolish MAT in forthcoming Budget, says industry body FICCI as BJP-led NDA govt gears up for its second term

New Delhi: Industry body FICCI on Friday sought a reduction in corporate tax and abolition of Minimum Alternate Tax (MAT) to spur investment as the BJP-led NDA government gears up for its second term.

The government had presented an Interim Budget for 2019-20 in February. A full Budget is likely to be presented in July.

"The key recommendation was that the focus of the government should be to spur domestic investment and in order to retain India's competitiveness globally, corporate tax rate cut should be considered," FICCI said after its delegation met Revenue Secretary Ajay Bhushan Pandey as part of the pre-budget discussion.

 Cut corporate tax, abolish MAT in forthcoming Budget, says industry body FICCI as BJP-led NDA govt gears up for its second term

Representational image. Reuters.

In the 2015-16 budget, the government had announced that the corporate tax rate would be gradually lowered to 25 percent from 30 percent over the next four years and exemptions available to companies would be phased out.

In subsequent years, the tax rate was reduced to 25 percent for companies with a turnover of up to Rs 250 crore.

During the meeting, FICCI said with phasing out of exemptions and deductions available under the Income Tax Act and to avoid complexities arising under new accounting norms, there is a need to review the concept of MAT.

"A recommendation has been made to abolish MAT and extend a simpler Alternate Minimum Tax as is currently applicable to non-corporate to corporates, but at a reduced rate of 10 percent considering the reduction in the corporate tax rate to 25 percent in line with the global trend," it said.

On the indirect tax side, FICCI said currently Merchandise Export from India Scheme (MEIS) and Service Export from India Scheme (SEIS) scrips cannot be utilised for payment of Integrated Goods and Services Tax (IGST) and GST compensation cess on imports.

The non-availability of utilising the scrips towards the payment of IGST has led to a financial burden on the importers.

It was recommended that the Foreign Trade Policy 2015-20 and Customs Law need to be amended for allowing the utilisation of MEIS and SEIS scrips towards the payment of GST on imports, it added.

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Updated Date: May 24, 2019 19:38:35 IST