The existing corporate tax structure is very appropriate given the size of the Indian economy, says the finance minister

The current corporate tax structure is very reasonable given the size of the Indian economy, Finance Minister Sanjay Malhotra said. The official said the concessional tax regime, which was applicable to new manufacturing units for four years, was not extended beyond the current financial year considering the size of the economy. Companies in particular are currently subject to a tax rate of 22 percent.

In an interview with PTI, the minister said about the tax structure: “The interim budget 2024-25 ensures continuity in the tax system and the benefits provided to taxpayers in the last few years are showing results in the form of a huge increase in personal income.” Tax. Taxpayer services have been a key focus of the Government and will continue to be so. Services for taxpayers include streamlining, simplification and trust-based taxation with less control and more precise assessments and use of technology. We are confident that taxpayer services will continue to improve to help us comply and improve tax collection efficiency.”

The official further commented on the decision not to extend the concessional tax regime for companies beyond the end of March, noting that the scheme was introduced in 2019 and companies were given ample time to set up new entities and benefit from the concessional tax rate to receive 15 percent.

“A long period of four years was given. This is the time it takes a large company to get off the ground from conception to planning to fundraising. After giving enough time, it was extended for another year until March 31, 2024 due to Covid. These investments have a long gestation period. Our country's current corporate tax rate of 22 percent is very, very reasonable compared to an economy our size. Considering all this, it was concluded that this was the date on which sunset dawned and was supposed to set,” Malhotra added.

At the beginning of 2019, the government announced that any new domestic company incorporated on or after October 1, 2019 will have the option to claim the 15 percent rate for paying income tax if it makes new investments in production They start their production on or before March 31, 2023. The deadline was further extended to March 31, 2024 in the 2023 budget. Malhotra clarified that companies that start operations before the end of the current financial year will be eligible to continue receiving the benefit.

In September 2019, the government also reduced the corporate tax rate for existing companies from 30 percent to 22 percent and from 25 percent to 15 percent for new manufacturing companies established after October 1, 2019.

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