India Inc is expecting that Finance Minister Arun Jaitley to cut corporate income tax rate, incentivise digital transactions, introduce radical steps to reduce litigation and strengthen dispute resolution mechanism in the forthcoming Budget to be tabled in Parliament on February 1, as per the media reports.
Commenting on the matter, Ficci, President, Pankaj Patel said that, "Since last year, the government has started reducing the corporate tax rate with a view to bring it down to 25 per cent by 2020. However, the progress has been a little slow, and only a few companies have been covered under the new tax regime so far. We would like this process to gain traction in the Budget."
Patel further added that, "The lending rates should also be brought down and easy financing should be made available for sectors such as housing. These steps can prove to be a confidence booster among the business fraternity and would encourage investment demand as well."
It was critical to reduce the individual income tax rates to boost consumer spending and encourage tax compliance, especially as the country has witnessed some amount of disruption post demonetization, he said.
"Despite the tax revenue showing smart growth despite demonetisation, the biggest challenge before the government is to revive the urban consumer demand and provide a huge stimulus to rural economy which had to bear the maximum impact of the note-ban. Inflation may be down, but it has to be seen in the context of glut in many crops, especially vegetables, resulting from excess output and cash withdrawal in November," Assocham said.
Industry body CII also believes that with more economic activity entering the tax net post demonetisation, government should lower corporate tax rate to 18 per cent in the Budget.