Budget proposes to reduce corporate tax by 5%

Finance minister Arun Jaitley has proposed reduction in the corporate tax rate from the current 30% to 25% over the next 4 years in the budget. The move is expected to lead to higher level of investment, higher growth and more jobs. Jaitley however said that the reduction has to be accompanied by rationalisation and removal of various kinds of exemptions and incentives which is leading to a large number of tax disputes. He pointed out that the effective collection of corporate tax today is about 23%.
 
The Finance Minister said he did not start the process of reduction right away as he wanted to give advance notice that these changes will start from the next financial year.
 
Arun Jaitley also said that his government is moving forward on various fronts to implement Goods and Services Tax (GST) from the next year. GST, for which the government has introduced a Bill in the last session of the parliament, is expected to play a transformative role in the way our economy functions. It will add buoyancy to the country’s economy by developing a common Indian market and reducing the cascading effect on the cost of goods and services. The Finance Minister said that as a part of the movement towards GST the education cess and the secondary and higher education cess are to be subsumed in the central excise duty.