Corporates expected to breathe a bit easy as statutory tax rates on them are likely to be reduced by three per cent in the Budget either through abolition of 10 per cent surcharge or reduction of corporate tax from the current level of 30 per cent. Either corporate tax rate is likely to be reduced to 27 per cent or surcharge abolished to give three per cent relief to corporates, sources told PTI.
The statutory rate of taxes on corporates stands at about 33.66 per cent with corporate tax of 30 per cent and surcharge of 10 per cent along with education cess of two per cent.
Corporates are demanding around five per cent cut in the corporate taxes, but it is not likely to be accepted entirely, sources said adding the cut may be limited to three per cent only.
They said meeting that demand would require phasing out of all the exemptions given to companies. Companies in India are given a host of tax exemptions.
These include tax holiday for software technology parks, export oriented units, infrastructure service providers and units set up in backward areas. Because of all these exemptions, effective rate of taxation on corporates works out to be much lower.
The government collected close to 50 per cent more corporate tax at Rs 97,315 crore (Rs 973.15 billion) during the first 10 months of this fiscal against Rs 65,094 crore (Rs 650.94 billion) during April-January of the previous fiscal.
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