Government panel submit report on the new Direct Tax Code 23/08/2019 – Posted in: Daily News – Tags:

CORPORATE TAX RATE

 

For: Mains

Topics covered:

  • Government recommendations for reduction in the corporate tax rate.
  • Benefits for and individuals and corporate taxpayers

 

News Flash

A government panel has recommended cutting the corporate tax rate to 25% from 30% for all companies and scrapping surcharges on tax payments.

India has one of the highest corporate tax rates in the world.

 

Highlights

  • The committee has said the government should move away from surcharges on income and reduce corporate tax to 25%.
  • India imposes a 30% corporate tax rate on domestic companies and 40% on foreign firms, plus a 4% health and education surcharge on total tax payments.
  • It also charges a surcharge of 12% for domestic companies and 5% for foreign companies if their taxable income exceeds 100 million rupees.

 

Panels mandate

The panel was formed in 2017 and tasked with bringing the income tax law in line with other countries, and incorporating best practices according to the needs of the economy.

 

For Individual taxpayers

  • One of the main objectives of the committee was to make the I-T Act simpler, with a focus on easing the burden on individuals and companies as an acute slowdown continues to erode economic growth.
  • The primary focus is on simplifying tax brackets to provide relief to middle-income taxpayers while removing any excess surcharges that add to the woes of taxpayers.

 

For corporates

  • The report is also expected to focus on promoting ease of doing business by suggesting a common tax rate for domestic and foreign companies.
  • The committee may have proposed a special set of provisions for startups, which are worst-affected when it comes to taxation.
  • The committee is expected to recommend the government to further reduce the tax burden on companies.

 

Source: India Today

 

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