Industry chamber FICCI on Sunday recommended the government to cut corporate tax rate across the board to 25 per cent irrespective of turnover in the forthcoming budget to spur economic growth and increase overall tax collections.
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.
"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 per cent makes the effective tax cost for a company too high," FICCI said in a statement.
As part of its pre-budget recommendations for 2019-20, it said with many key global economies going for significant rate cuts, there is a need for India to consider across-the-board rate cuts for businesses.
It has recommended reduction in the rate of Minimum Alternate Tax as the current rate of 18.5 per cent is "quite high".
"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," the Federation of Indian Chambers of Commerce and Industry (FICCI) added.
Besides, it asked for continued weighted deductions under the Income Tax Act, 1961, to 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 Act.
It is also recommended that tax exemption limit of Rs 50 per meal to employees should be revised to at least Rs 200 per meal, to factor in rising inflation.
An interim budget is expected to be presented by Finance Minister Arun Jaitley on February 1.
