Making out a strong case for slashing of corporate tax to 25 per cent, the ASSOCHAM President, Sandeep Jajodia said in his presentation before Finance Minister, Arun Jaitley tax exemption limits for senior citizens and salaried employees should be also raised substantially for a demand push to the economy.
Participating in the Pre-Budget consultations with the Finance Minister today, the ASSOCHAM President said senior citizens and salaried employees are particularly affected by rising prices of essential commodities and deserve relief. This would not only give a push to the consumer demand but also promote personal savings.
As for India Inc, Jajodia said, corporate tax should be reduced to 25% as committed by the Government earlier, to encourage investment by domestic and foreign companies. Considering that U.S. Government is also in the process of making major tax cuts in US and other countries like Singapore and Middle East already has lower tax rates, the reduction of corporate tax rate will be a right step in a highly competitive global environment. Similarly Dividend Distribution Tax rate should also be reduced.
In case of Bankruptcy & Insolvency scheme implementation waiver amount due to sale of assets, transfer of business or part thereof, change in capital etc should be made to tax neutral and tax attributes like losses / depreciation / allowances should be allowed to be carried forward in the hands of the successor so long as terms of implementation are followed.
Many countries permit a group of related companies to be treated as a single taxpayer, or have a special regime for group members. It is recommended that to reduce the compliance burden of the group as a whole and to provide flexibility to organize the business activities of group a system of group taxation may be introduced which could provide for consolidated filing of return and assessment, Jajodia said.
As for indirect taxes, the chamber said the complex GST compliance procedures have adversely affected the business activities, particularly in the SME sector and even some large industry segments like textiles. The Government should involve active participation of trade and industry to simplify the process for smooth transition.
GST law contains several audit and investigation provisions which can be exercised even at lower level without fixing responsibility for their misused. Appeals against high pitched tax assessment require upfront advance deposit by tax payer but without any responsibility on the part of tax department. This led to prolonged litigation and tax uncertainty. Government must fix accountability on tax administrators.