FM promises lower corporate tax once GST collections stabilise

Finance minister Arun Jaitley on Tuesday promised industry leaders to reduce the corporate tax rate to 25% from 30% for all the companies once the Goods and Service Tax (GST) revenues improve, Ficci president Sandip Somany said.

Jaitley interacted with the industry leaders and the members of Federation of Indian Chambers of Commerce & Industry (Ficci) and discussed their agenda for growth and inclusiveness for the next government.

“As the GST collection goes up, he will look at the income tax rates for the corporate sector in terms of lowering it. And it will be progressive. As the GST keeps climbing, the tax rates could be reduced in the future,” Somany said after the meeting.

A range of issues including furthering growth, taxation, GST collections, employment generation and social sector schemes were discussed during the meeting, Somany said. Those who attended the meeting included Rajan Bharti Mittal of Bharti Enterprises, K K Modi of Modi Enterprises, Harshvardhan Neotia of Ambuja Neotia Group, Harsh Pati Singhania of JK Paper and Rashesh Shah of Edelweiss Group.

Somany said the delegation had gone to give Ficci’s agenda for growth and inclusiveness for the next government. The industry body had prepared a concept paper on it.

Lowering of corporate tax for all the companies to 25% was promised by the NDA government after it came to power.

In the Budget 2015-16, Jaitley had spoken about the government’s commitment to reduce corporate tax rates to 25% over the next four years from 30%. This was to be accompanied by a corresponding phasing out of tax exemptions and deductions for which a road map was laid down. The government had lowered the corporate tax to 25% from 30% first time in the Budget of 2017-18 for companies with a turnover of up to Rs 50 crore.

In the Budget 2018-19, the lower tax rate was extended to companies with an annual turnover of up to Rs 250 crore, covering a majority of the small and medium enterprises. Though the move benefitted 99% companies, it did not cover the businesses which pay the majority of taxes. With the NDA government presenting its last Budget on February 1, the big businesses were hoping for the promise to be fulfilled even though it was an Interim Budget. However, the corporate tax rate was left untouched.