The Hindu Business Line : `Phase-out corporate tax exemptions slowly'

The Union Government should do away with exemptions and deductions in a phased manner, according to Mr Sanjay Bhatia, President of the PHD Chamber of Commerce.

Reacting to the Prime Minister's remarks on phasing out corporate tax exemptions, Mr Bhatia said the Centre should simultaneously withdraw fringe benefit tax (FBT) and minimum alternate tax (MAT).

He said corporate tax rate should be lowered and surcharge removed to make investments attractive.

At present, the effective corporate tax rate inclusive of surcharge, education cess, FBT, dividend distribution tax, MAT and lower depreciation rates worked out higher than 30 per cent. The Government should instead aim at widening the tax base to augment its revenues, he said. In an efficient, simplified tax administrative regime, there should be least interaction between assessees and tax collectors to reduce discretion with the tax authority. Income tax returns should be picked up for scrutiny on a random, non-discretionary basis, Mr Bhatia said.

The Government's move to simplify custom and excise duty structure had encouraged voluntary compliance and the role of the tax administering authority had gradually shrunk. Similar exercise in direct taxes would help in making the tax laws more assessee-friendly, besides reducing the cost of tax compliance and paper work, Mr Bhatia said.

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