Uphill climb for big firms wanting corporation tax reduced to 25%

As a percentage of corporation tax collection, revenue foregone for FY19 has been projected to be the same as the previous year at 16.3 per cent

The road to extend corporation tax rate reduction to 25 per cent for large firms may become challenging, with revenue foregone on account of tax incentives and exemptions growing at a rapid pace.

Revenue foregone on account of corporation tax exemptions is estimated to grow by 16 per cent in 2018-19 (FY19) versus 8.7 per cent in the previous year and 12 per cent in 2016-17, show the Budget documents.

The Income Tax (I-T) Act provides tax incentives in the form of tax concessions for entities involved in exports, creation of infrastructure facilities, scientific research and development, rural development, etc.