Why should India cut down its Corporate Tax?

Corporate World News

Business Mantra News

Global think-tank organization for Economic Corporation and Development (OECD) has advised that India should bring down Rate of Corporate Tax to 25 percent, introduce inheritance tax and provide certainty in rules.

In its Economic survey of India, the OECD said Comprehensive Tax Reforms especially the GST would lift all boats and it suggested eliminating tax expenditure and raise revenue. It will effectively help the government to reduce high poverty rate.

To bring tax reform in Corporate world is not an easy task. Many technicalities are in the way as lowering tax rates would lead to further reduction of tax by other countries which will take competitive advantage. For example United States is also putting the theory in practice by lowering down the Corporate Tax to 20 % to 30%. They are hoping that it will boost growth and create more job opportunities.

OECD also recommended that “Gradual reduction in the Corporate Tax from 30 per cent to 25 per cent while broadening the tax base and providing certainty regarding tax rules and their implementations”

Reduction in Corporate Tax will resultantly boom the growth of Indian Industry. As it will attract foreign investors and give more liquidity to Indian Companies to expand their businesses overseas. This will also increase inward investments.

The thicket of concessions in corporate tax must raised to India’s GDP ratio. The current ratio of both Central and State is about 17% of which about 5.7% comes from Direct Taxes and 7% from Indirect Taxes that have been comprised in GST.

The OECD said that high corporate tax deter foreign investors hence to attract foreign investors, the distribution dividend tax should be replaced by a traditional withholding tax system and Non-resident Tax rate should also be kept lower.

It suggested that the Government should bring reforms in property and personal income tax, which are paid by few people in India to raise more revenue and to promote global investments.

It is reiterated that India should bring down Corporate Tax structure in order to have more collection of tax quantum wise.

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