The Indian government's plan to reduce corporate tax will begin with phasing out some exemptions for companies, a document on the tax office's website said on Friday. Profit-linked, investment-linked and area-based deductions will be phased out for both corporate and non-corporate tax payers, Reuters reported. For tax incentives with no given date of termination, the government has set March 31, 2017 as the sunset date, the tax office said. A "sunset date" refers to a particular date or period post which a law or regulation will cease to exist automatically. The clause will apply to the development, operation and maintenance of infrastructure facilities, the development of special economic zones as well as the commercial production of natural gas and mineral blocks, according to the document.
The government is looking to simplify tax laws and make them transparent before it lowers the tax rate, and has asked for stakeholder comments on the proposals within 15 days. The government plans to lower the corporate tax rate to 25 percent from 30 percent over a period of four years, Jaitley had said in his budget speech in February. At present, the government enforces a higher tax rate, but offers exemptions, which will cease to be the case.