The government has released a roadmap for phasing out corporate tax exemptions with an aim to simplify tax laws, which is expected to bring about transparency and clarity.
The Finance Minister in his Budget Speech, 2015 indicated that the rate of corporate tax will be reduced from 30% to 25% over the next four years along with corresponding phasing out of exemptions and deductions.
The Government proposes to implement this decision in the following manner:
- Profit linked, investment linked and area based deductions will be phased out for both corporate and non-corporate tax payers.
- The provisions having a sunset date will not be modified to advance the sunset date. Similarly the sunset dates provided in the Act will not be extended.
- In case of tax incentives with no terminal date, a sunset date of 31.3.2017 will be provided either for commencement of the activity or for claim of benefit depending upon the structure of the relevant provisions of the Act.
- There will be no weighted deduction with effect from 01.04.2017.
Ultimately the goal is to make this revenue neutral so that we do not suffer in terms of our revenue collection, but ultimately we think this is going to help businesses because they will have a much simpler tax code and that will result in heightened economic activity," said Mr Sinha while inaugurating an ‘International Technology Summit,' organised by ASSOCHAM.