The government raising Minimum Alternate Tax (MAT), the percentage of book profits that companies have to pay as corporate tax, from 10 per cent to 15 per cent is not "draconian", Revenue Secretary P V Bhide said today.
"After all 10 per cent (MAT)... Has gone up to 15 per cent. It is not so draconian that you are making. When you give something you have to set off something," Bhide said while addressing the customary post-Budget press conference.
Finance Minister Pranab Mukherjee in his Budget speech announced raising the incidence of MAT to 15 per cent, while abolishing the Fringe Benefit Tax and surcharge on personal income above Rs 10 lakh.
Removal of FBT and surcharge on personal income tax will cost the exchequer about Rs 10,000 crore and Rs 5,000- 6,000 crore respectively, he said, adding the losses have to be made good. "It is really a balancing act," he added.
Finance Ministry's direct tax proposals, which also include raising the tax exemption limit by Rs 10,000 for general tax payers and Rs 15,000 for senior citizens, are revenue neutral.
