New Delhi: Finance Minister Arun Jaitley has proposed to reduce corporate tax rate from the current 30% to 25% over the next 4 years, in the Union Budget 2015.
In his Budget Speech in Lok Sabha, Jaitley said this is expected to lead to higher level of investment, higher growth and more jobs.
The Minister, however, said that the reduction has to be accompanied by rationalization and removal of various kinds of exemptions and incentives which is leading to a large number of tax disputes. He pointed out that the effective collection of corporate tax is about 23%.
The Finance Minister said he did not start the process of reduction right away as he wanted to give advance notice that these changes will start from the next financial year.
Jaitley also said that his government is moving forward on various fronts to implement Goods and Services Tax (GST) from the next year.
GST is expected to play a transformative role in the way economy functions. It will add buoyancy to the economy by developing a common Indian market and reducing the cascading effect on the cost of goods and services, Jaitley added.
The Finance Minister said that as a part of the movement towards GST the education cess and the secondary and higher education cess are to be subsumed in the central excise duty.
'It's a progressive and well balanced budget that will lay the foundation of major structural changes in the Indian economy in the coming years. The hike in individual tax exemption is a welcome step that will give more money in hands of the people', says Vaibhav Singhal, MD & CEO, Savemax.
Retail giant Walmart sees an increase in India's domestic consumption and retail growth over a period of time on the back of social security measures proposed in the Budget.
‘The new government’s maiden budget proposes to levy service tax for online and mobile advertising which we believe will adversely affect the industry’s growth. It reflects differentiated treatment as traditional print media remains unaffected with respect to the tax purview but new digital media that is actually driving innovation will have to unfortunately bear the brunt. Currently, India’s exponential mobile penetration and app consumption patterns are driving the growth of the mobile advertising industry and this development could hamper innovation efforts of the entire ecosystem comprising of mobile development startups, advertisers and publishers. We would have loved to have a more future focused policy regarding this particular aspect of the budget,’ Zafar Rais, CEO, MindShift Interactive, said.
E-commerce transactions through websites and mobile apps based on 'aggregator model', including for cab services and online shopping, may turn expensive as those providing such services under their own brand are being brought under the service tax net.