Revenue Secretary Hasmukh Adhia on Saturday said it was necessary for the country’s tax base to widen before the government could consider lowering corporate levies. Speaking at a post-Budget interactive session, Adhia said getting more people to file the exact details of their income was a challenge for the Union government, The Indian Express reported.
The share of personal income tax in overall collections is “abysmally low”, amounting to only 2% of the gross domestic product, he said. “This would probably be the lowest in the world.” Even a 1% cut in corporate tax rates will result in a revenue loss of between Rs 18,000 crore and Rs 19,000 crore for the exchequer, the revenue secretary added.
For the 2015-2016 Budget, Finance Minister Arun Jaitley had announced that the Centre would reduce the corporate tax rate to 25% from the current 30% over a four-year period, along with phasing out exemptions. In this year’s Budget, Jaitley reduced the corporate tax rate to 25% for small and medium firms with turnovers of less than Rs 50 crore. The finance minister also proposed slashing levies on the Rs 2.5 lakh to Rs 5 lakh income slab from 10% to 5%.