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PHD Chamber of Commerce and Industry has urged the Finance Ministry to not only bring down the corporate tax at committed ceiling of 25% but also sought drastic reduction in Minimum Alternate Tax (MAT), besides reiterating its demand for hike in medical reimbursements limit from Rs.15,000 to Rs.50,000 per annum for salaried class.
In its pre-budget memorandum submitted to the Ministry, the Chamber has argued that the present MAT rate of 18.5% comes out to around 20% including surcharge and cess, which is very high and needs to be rationalized in the forthcoming Budget proposals for fiscal 2018-19.
President, PHD Chamber, Mr. Anil Khaitan sought rationalization of MAT rates, pointing out that the purpose behind introduction of MAT was to bring all zero tax companies within the tax net as this taxation was introduced way back in 2000 at 7.5%.
The Chamber reminded that though the government plans to reduce the corporate tax rate from 30% to 25% in a phased manner, the reduction of tax has to be necessarily accompanied by rationalization and removal of various kinds of tax exemptions and incentives for corporate taxpayers.
The Finance Act 2016 also amended the relevant provisions of the Act, ensuring the phasing out of deductions and incentives available to companies to realign with the governments' decision of reducing the corporate tax rates.
Therefore, the Chamber has suggested stressing that since the process of phase out of exemptions and incentives has already commenced, it is urged that the rate tax applicable under MAT be appropriately reduced so as to factor in the reduction of the benefits which were otherwise available on account of incentives and deduction.
Elaborating on the suggested hike in medical reimbursements ceiling, Mr. Khaitan said that in order to align with inflation and increasing cost of living, the government should not only further rationalize the personal taxation limit significantly but also hike medical reimbursements limit to Rs.50,000 per annum from its current yearly slab of Rs.15,000 for salaried employees.
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