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There are major litigations on account of margins that the contract manufacturer should have earned by transfer pricing cell of income tax department. The Central Board of Direct Taxes (CBDT) has notified the Safe Harbour rule covering sector like IT/ITES, KPO and auto component manufacturers prescribing desirable margins to avoid litigations under transfer pricing regulations. Considering that weighted deductions and tax holidays are being phased out, MTaI recommended that the corporate tax rates should also be reduced for large companies in line with the government's objective to widen the tax base and make these companies globally competitive. MTaI also raised concerns over high custom duties on medical devices. There was a significant increase ranging 50-60 per cent on medical devices. This has adversely impacted costs for these products in India where the government agenda is to provide low cost healthcare available to masses. This is especially important in view of the fact that a significant 67-70 per cent of healthcare spends is through private spending and there exists a wide gap in local manufacturing of high quality medical devices. The association has also urged the government to reduce Minimum Alternative Tax (MAT) rate to 15 per cent.
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