India Inc today demanded slashing of the minimum alternate tax (MAT) rate from the current 18 per cent, a move that comes a few days after the industry got positive response from the government over its grievances on calculation of this levy.
"The rate of MAT should be brought down," Bhavna Doshi, senior advisor KPMG, representing Assocham, said after a delegation of industry met finance ministry officials on the proposed direct taxes code (DTC).
In the revised DTC draft, on which the government has invited comments from stakeholders till today, dropped the earlier proposal to impose MAT on gross assets after industry fiercely opposed it. The revised draft clarifies that the tax will be levied on the book profit, as is the current practice, and not on gross assets as was proposed in the first draft.
MAT is a levy imposed on profit earning companies which do not fall under the tax net due to various exemptions.
The revised draft also denies tax exemptions to new units in the SEZs, which would make the future of 469 approved special economic zones that are yet to become operational, uncertain.
According to co-chairman of Ficci direct taxation committee R Sridhar, "the SEZs which have got approval from the government before direct tax code becoming operational should be given tax exemption."
Besides, the industry also discussed other issues including capital gains tax, double taxation avoidance agreement.
"Credit on MAT should continue. Capital gains should be calculated from the date of acquisition," PHD Chamber Senior Vice-President Salil Bhandari said.
The government plans to introduce a draft legislation on the DTC in Parliament in the forthcoming monsoon session. "If Parliament procedure is complete and it becomes a law, it will be implemented from April 1, 2011," Revenue Secretary Sunil Mitra had said.
