Tax base must widen before corporate rates can be cut, says revenue secretary
Even 1% reduction in corporate levies will cost the exchequer Rs 18,000 to Rs 19,000 crore, Hasmukh Adhia said.
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%.