With the US substantially cutting corporate tax, the minister will also need to keep India's tax rate globally competitive, they added.
The industry is doubtful whether Jaitley would fulfil his promise of reducing corporate tax rate from 30 per cent to 25 per cent over four years. However, it wants the minister to consider moderating it to at least 28 per cent in the forthcoming Budget.
To be unveiled on February 1, it would be the last full Budget of the present NDA government.
Not expecting Jaitley to cut corporate tax rate to 25 per cent in view of fiscal constraints, Ficci president Rashesh Shah said the minister should endeavour to bring it down to 28 per cent.
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"I am hoping that in this Budget, they will bring down the tax rate to 28 per cent at least to give a confidence that they are on that path," Shah told PTI.
He was also of the view that the cut in tax rates would also help the Indian industry in meeting the challenges emanating from tax cuts by the Trump administration in the US and its aftermath in other developing countries.
The Senate approved the USD 1.5 trillion tax bill, which includes permanent tax breaks for corporations and temporary tax cuts for individuals, by a final vote of 51-48.
CII suggested that the corporate tax rate should be brought down to 18 per cent all inclusive.
"Reduction in tax rates should even be extended to other forms of unincorporated bodies/business entities like partnerships, LLPs, AOPs and co-operative societies to ensure horizontal equity between different legal forms in which business is carried on," it recommended.
Further, in order to encourage flow of funds (in form of dividend) from overseas subsidiaries, the reduction of MAT on such dividends is warranted, Singhania said.
"In order to facilitate the insolvency bids, the government may provide clarification on the waiver of loan by lenders in the hands of the company under normal provisions of the Income Tax Act, 1961," he said.
"This would involve reduction in the corporate tax rate to 25 per cent in line with the Finance Minister's four year old announcement; US has substantially reduced its corporate tax rate to 21 per cent from January 2018," Chaudhri said.
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