KPMG has said that India needs a single corporate tax rate of 25% sans any surcharge or cess above it. The accounting and advisory firm in a report has favoured a simple tax structure, which should be adopted by the Indian government.
The report titled "India: Redefining its growth path" noted that the Minimum Alternate Tax (MAT) should be removed and Dividend Distribution Tax (DDT) needs to be superseded by the withholding tax.
"Following the global trend on lowering of corporate tax rates and maintaining competitiveness, India should move to a simple tax rate structure -- single corporate tax rate of 25 per cent with no surcharge and cess," the IANS cited the report, as saying.
Finance minister Nirmala Sitharaman in her maiden Union Budget 2019-20, which she presented in July, had proposed to increase the annual turnover threshold limit from Rs 250 crore to Rs 400 crore for availing a lower corporate tax rate of 25%, thus, bringing down the corporate tax rate of companies making up to Rs 400 crore from the earlier 30% bracket.
Sitharaman had recently said that the tax rates for companies with over Rs 400 turnover will be gradually brought down to 25% and the government will support wealth creators.
The KPMG report also enunciated the tax rate for foreign firms should be reduced proportionately from the present 40% rate (plus surcharge and cess).
"It is hoped that the remodelling of the tax structure, through further simplification of the GST structure and promulgating a new Direct Taxes Code is likely to make the Indian tax system more equitable for all classes of taxpayers," said Hitesh Gajaria, Head of Tax, KPMG in India.
"There is also the hope that lower tax rates for all corporates and indeed, all taxpayers, along with a fair, rational and even-handed tax administration will help Indan businesses become more competitive in the global space," he added.