Industry chamber FICCI on Sunday recommended that the government lower corporate tax rates across the board to 25 per cent irrespective of turnover in the coming Interim Union Budget on February 1 in order to spur economic growth and increase overall revenue collections.
Ficci said in a statement that in its pre-Budget recommendations to the Ministry, it had also suggested a revision in the tax slabs for the individual taxpayers and make the top 30 per cent rate applicable to annual incomes above Rs 20 lakh.
"Businesses today are faced with high tax cost leading to increased cost of production and resultant lower surplus for reinvestment and expansion. The basic corporate tax rate of 30 per cent coupled with dividend distribution tax rate of 20 percent makes the effective tax cost for a company too high," the statement said.
"The chamber has also suggested revision in the tax slabs for the individual taxpayers with the top 30 per cent rate to be applied beyond Rs 20 lakh annual income."
For individual income tax payers currently, the peak tax rate of 30 per cent is applicable over an income of Rs 10 lakh.
"However, the income level on which peak rate is applied in other countries is significantly higher. Hence, there is a need for further raising the income level on which the peak tax rate would trigger, to make the same compatible with the international standards," Ficci said, recommending that the highest rate be applied to incomes beyond Rs 20 lakh.
The industry chamber has also recommended a reduction in the current "high" rate of Minimum Alternate Tax (MAT) at 18.5 per cent.
"The burden of MAT should also be gradually reduced from the current levels to a rate which will be commensurate with the phasing out of tax exemptions and incentives," it said.
The Federation of Indian Chambers of Commerce and Industry (Ficci) has moreover asked for continued weighted deductions in income tax for various modes of scientific research expenditure, deduction for corporate social responsibility expenditure and increasing the overall deduction limit to at least Rs 3 lakh under the Income Tax Act.