Govt. May Reduce Corporate Tax

The Government of India has stepped forward to create an investor friendly climate in the country. For making it fruitful the tax system in the country is expected to be emphasized in the coming budget 2007-08. The Government may reduce the statutory tax rates on the companies in the coming budget.

The corporate tax rate in India should be designed in a manner, which is comparable with the ASEAN countries. In India companies are given tax benefits, which comprises tax holiday for software technology parks, and also to infrastructure service providers.

The concept of corporate tax issue also comes in the context of taxation of dividends. The Confederation of Indian Industry in its budget proposal has viewed that tax on dividends is a form of double taxation.
CII has proposed that in the country like India it is desirable for doing away with the dividend distribution tax. Otherwise reduce the tax rate to 5 percent.

A large number of countries over the world have reduced the tax rates for attracting more investments to the country. In the budget 2005-06, the corporate tax was reduced to 30 percent. In this budget the Government is again expected to reduce the corporate tax.