Collapse Cess and Surcharge into Single Corporate Tax: CII

Higher Depreciation Required for Spurring Investment Led Growth: CII

Eliminate Cascading Effect of Dividend Distribution Tax: CII

To reduce complications and unproductive time spent by industry in tax filing, CII has recommended that it is more efficient to have one rate of corporate tax rather than many cesses & surcharge and accordingly has suggested that the levy of surcharge and cess on Corporate Tax be abolished. As an alternative, CII has suggested that a component of Corporate Tax can be set aside for supporting the education needs of the country, without having a separate levy. In other words the rates need to be collapsed into the single Corporate Tax rate, as per CII.

With an objective of incentivizing investments and also to enable industry in India to stay abreast with the latest technological advances, CII has suggested that depreciation rate incase of plant and machinery be raised from 15% to 25% (as was the case earlier) and allow full depreciation on assets which have limited life and small cost upto Rs. 25000/-. CII has also recommended bringing ‘Goodwill’ under the purview of intangible assets in order to be eligible for depreciation. The apex body has asked for the restoration of the depreciation rate applicable to hotel buildings to 20% from the current rate of 10%.

To get rid of  the cascading effect caused by multiple taxation of dividend distribution faced by a corporate group and its step down subsidiary, CII has suggested complete elimination of clause (c) of the subsection 1A of section 115-O making deductions available in case of inter-corporate dividends. CII has also recommended that to enable Indian companies to compete effectively in the world market by setting up overseas entities, dividends received from such entities in convertible foreign exchange in India should be fully exempt from tax in line with the dividend received from any domestic company.