New Delhi:Industry chamber Ficci or Federation of Indian Chambers of Commerce and Industry on Sunday recommended that government lower corporate tax rates across board to 25 per cent irrespective of turnover in coming Union Budget on February 1 in order to spur economic growth and increase overall revenue collections.Ficci said in a statement that in its pre-Budget recommendations to government, it had also suggested a revision in tax slabs for individual taxpayers."Businesses today are faced with high tax cost leading to increased cost of production and resultant lower surplus for reinvestment and expansion.
The basic corporate tax rate of 30 per cent coupled with dividend distribution tax rate of 20 per cent makes effective tax cost for a company too high," statement said."The chamber has also suggested revision in tax slabs for individual taxpayers with top 30 per cent rate to be applied beyond Rs 20 lakh annual income."For individual income tax payers currently, peak tax rate of 30 per cent is applicable over an income of Rs 10 lakh."However, income level on which peak rate is applied in other countries is significantly higher.
Hence, there is a need for further raising income level on which peak tax rate would trigger, to make same compatible with international standards," Ficci said, recommending that highest rate be applied to incomes beyond Rs 20 lakh.The industry chamber has also recommended a reduction in current "high" rate of minimum alternate tax (MAT) at 18.5 per cent."The burden of MAT should also be gradually reduced from current levels to a rate which will be commensurate with phasing out of tax exemptions and incentives," it said.Ficci has moreover asked for continued weighted deductions in income tax for various modes of scientific research expenditure, deduction for corporate social responsibility expenditure and increasing overall deduction limit to at least Rs 3 lakh under Income Tax Act.