The Hindu Business Line : Step towards tax neutrality

CORPORATE tax rates have been reduced to 33 per cent (including surcharge), which is also the maximum marginal rate that applies to individuals (at the highest slab).

With this move, we have effectively achieved tax neutrality.

However, the rate reduction has been accompanied by a reduction in tax depreciation rates to dovetail the depreciation claim over the useful life of the asset.

This would mean that capital-intensive entities will have to take a closer look at their tax computations to verify whether this change really benefits them.

This change has also been accompanied by an incremental allowance of further depreciation allowance of 20 per cent in the case of plant and machinery used for expansion.

There are specific safeguards to ensure that only plant and machinery employed at factories and manufacturing units are eligible for the benefit.

Overall, it is a move that should be welcomed by the corporate community.

(The author is Partner, BMR and Associates.)

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