Corporate tax remains unchanged
Sinha maintains corporate tax rates at 35%
In the face of sluggish revenue growth in the current fiscal, Sinha decides not to cut corporate tax rates, thereby disappointing corporate India and maintains it at the same rate of 35%. With increased government expenditure due to substantial public investment, the Centre had no other choice than to keep the corporate tax rate unchanged. This was despite appointing a series of committees to review the application of Minimum Alternate Tax.
Expectations were that the finance minister would cut corporate tax rate from 35% to 30% and abolish Minimum Alternate Tax (MAT) altogether. Currently, companies which do not fall under the purview of corporate tax are made to pay MAT at 7.5% on book profits.
The Parthasarathi Shome Committee had recommended tightening of MAT by levying it on the company’s networth in order to avoid accounting window-dressing. The Committee had also suggested merging it with dividend tax.
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