New Delhi: While the implementation of a goods and services tax (GST) faced uncertainty on Wednesday, Finance Minister Arun Jaitley reaffirmed the government’s commitment to economic reforms, saying corporation tax exemptions would be phased out and weaker banks consolidated with strong ones.
In line with the Budget announcement of reducing corporation tax by five percentage points to 25 per cent in four years, Jaitley said the government would release a list of tax exemptions to be withdrawn in a phased manner. The aim is to align taxation levels in India with global standards and with those in competing countries.
“Over the next few days, we will come out with a list of exemptions, which we intend to phase out in the first place. In the next four years, corporation tax will come down by five per cent and a lot of exemptions will be phased out,” Jaitley said at a summit organised by The Economist.
While corporation tax stands at 30 per cent, the effective rate of taxation is 23 per cent, on account of a large number of exemptions. There are 38 different deductions extended to the corporate sector. In 2012-13, the revenue forgone on account of such exemptions was Rs 68,000 crore.
“Therefore, we will slowly bring taxation levels to global standards and make tax assessment and returns simpler by just eliminating a lot of exemptions,” Jaitley said.
He added measures to protect the domestic steel sector from dumping by foreign manufacturers were being examined. Later in the day, an official statement said the director general of safeguards had recommended imposition of a 20 per cent provision duty on hot-rolled non-alloy and steel alloys.