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India May Accelerate Corporate Tax Cut

by Mary Swire, Tax-News.com, Hong Kong

03 November 2015


Indian Revenue Secretary Hasmukh Adhia revealed on November 2 that the Government is considering bringing forward its plans to reduce the rate of corporate tax and repeal some tax exemptions.

Fielding questions from the media, Adhia said that the road map for the phasing out of tax exemptions will be unveiled "soon," and hinted that the proposals might be presented before the end of 2015. He also suggested that the timetable for the proposed corporate tax cut might be shortened, as part of wider efforts to simplify the tax code and attract more foreign investors.

In his 2015 Budget speech, India's Finance Minister, Arun Jaitley, set out his roadmap for accelerating growth and enhancing prospects for investment, including plans for a five percent cut to the corporate income tax rate. The tax cut, which would lower the rate to 25 percent within four years, would be funded in part by a review of various tax exemptions and incentives.

In his speech, Jaitley said that while there had been a feeling of "doom and gloom" ahead of his Government taking office, India now has "reason to feel optimistic," with real gross domestic product growth thought to have reached 7.4 percent in 2014/15 and with projections that growth will rise to between 8-8.5 percent in 2015/16.

In a report published on October 29, the World Bank agreed with the Government optimistic assessment of the economy, stating that: "There are good reasons for confidence in India's near-term prospects."

However, the World Bank said that the Government must implement economic and tax reforms to lay the foundation for sustainable growth, including the proposed Goods and Services Tax, which remains becalmed in Parliament.

"While progress is visible in several areas, including improvements in the ease of doing business, some key reforms, most notably the implementation of the Goods and Services Tax, can be a potential game changer for India," said Onno Ruhl, World Bank Country Director in India.

TAGS: Finance | tax | investment | business | India | gross domestic product (GDP) | corporation tax | goods and services tax (GST) | tax reform | services | Tax

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