Govt unlikely to lower corporate tax for large companies, could raise LTCG tax: Report
The newly-elected government is unlikely to cut the tax rate for large companies and might raise the long-term capital gains (LTCGs) tax, Mint reports.
Former Finance Minister Arun Jaitley had promised to lower the corporate tax rate to 25 percent while presenting the budget for FY16. In his FY17 budget, he cut the rate to 29 percent for small companies with sales up to Rs 5 crore and to 25 percent for new manufacturing companies. The 25 percent tax rate benefit was subsequently extended to companies with sales up to Rs 50 crore in the FY18 budget, which was further enlarged to encompass businesses with Rs 250 crore in sales in his FY19 budget.
LTCG tax on gains exceeding Rs 1 lakh from stocks held for over one year is currently at 10 percent. Jaitley had in 2018 re-introduced LTCG tax while presenting the Budget for FY19.
The Budget for 2019-20 will be presented on July 5 by Finance Minister Nirmala Sitharaman.
Moneycontrol could not independently verify the story.
The government is evaluating ways to boost tax revenue by finding new sources or milking existing ones, the article quoted a source as saying.
Lowering the tax rate for large companies will pinch the government and has to be accompanied by strong anti-evasion measures, a source told the publication, adding: “There is no fiscal space for it at this juncture.”
The government had set a corporate tax collection target of Rs 7.6 lakh crore during the interim Budget for FY20.
About 7,000 companies are currently in the 30 percent corporate tax slab, and contribute to the bulk of the tax collection.
An expert panel working on tax reforms is scheduled to submit its report by July-end.