Engineering exporters' apex body EEPC has sought continuation of certain tax exemptions, even if the government goes in for reduction of corporate tax from 30 per cent to 25 per cent.
In pre-Budget meeting with Finance Minister Arun Jaitley, EEPC said if the deductions have to be phased out, then the corporate tax rate should be brought down to the MAT rate of 18 per cent, or at least export income should be taxed at the MAT rate.
"While at a conceptual level, the logic of having corporate income tax at 25 per cent along with no deductions seems fine, we must keep into account the fact that India's industrial, especially, the manufacturing sector accounts for a meagre 16 per cent of GDP.
"The withdrawal of certain exemptions which are critical for investments, particularly in capital equipment, would have a serious repercussion, and retaining the exemptions are therefore absolutely imperative at least for the next 10 years," EEPC India Chairman T S Bhasin said in a statement.
He said this is also in line with the government's attempt to raise the share of manufacturing to 25 per cent of GDP in the next decade and also ensure the success of the 'Make In India' initiative of Prime Minister Narendra Modi.
"We would therefore urge the government to delay the phasing out of the deductions and lower the tax rates to 25 per cent, and proactive measures to boost private investment and expand manufacturing capacity," he said.
In another demand, EEPC said exemption of the income tax may be provided on the profits derived on transfer of incentive scrips like MEIS (Merchandise Export from India Scheme) and SEIS (Service Exports from India Scheme) allowed under foreign trade policy.
