It has also urged for rationalization of domestic transfer pricing provisions and as well sought simplification of Section 72A relating to amalgamation and de-mergers and also suggested that CSR expenditure should be allowed as an expense of the corporate.
While submitting its suggestions to the Revenue Secretary Mr. Shaktikanta Das here today during the government's pre-budget meeting with the delegation of PHD Chamber under the leadership of its Senior Vice President Mr. Alok B Shriram, the Chamber pointed out that presently, the effective corporate tax rate works out to be 33.99% including surcharge and cess.
This is significantly higher as compared with other developing and developed countries. In addition to this, DDT also impose a further strain on companies leading to increased outgo towards income taxes thus leaving inadequate funds for generation of internal resources for ploughing back for expansion, modernization, technology upgradation and R&D.
Thus, Mr. Shriram suggested that the corporate tax rate be brought down to 25% to provide level playing field and facilitate better tax compliance and optimize business viability.
The PHD Chamber also urged that MAT should be reduced to 15% as it started at 7.5% and has been steadily increased to 18.5%, taking away from the relevant priority sector tax deductions and incentives.
Mr. Shriram also pointed out that Section 72A relating to amalgamation and de-mergers saying that in respect of amalgamation or de-mergers are currently limited to industrial undertakings or a ship, hotel, air craft or banking.
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The provision of section 72A should be simplified and rationalized specially in respect of the conditions applicable for the amalgamating company like losses / depreciation being unabsorbed for at least three years and holding assets on the amalgamation date upto of the book value of fixed assets held two years prior to the said date. The tax benefits may be extended to other businesses such as financial services, entertainment/sports, Information Technology (IT) and IT enabled services, he said.
PHD Chamber is also of the view that the domestic transfer pricing provisions needs rationalization, clarifications and removal of anomalies to make them cleaner and equitable and added that CSR is a mandatory and statutory expense in the course of the assessee's business as a corporate entity. Thus such expenditure be allowed as an expense.
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