The Indian government on November 20 released more details of its plan, announced in Finance Minister Arun Jaitley’s budget speech, to reduce the corporate tax from 30 percent to 25 and to phase out deductions over a four year period.
The plan includes reductions to depreciation deductions and the elimination of rules that provide a weighted deduction for some capital expenditures. The government also recommends a sunset date for tax incentives and said that tax incentives that already have a sunset date should not be renewed.
Jaitley explained during his budget announcement that India’s headline corporate tax rate, currently set at 30 percent, is unattractively high as compared other Asian nations. At the same time, he said, tax is collected in India at only a 23 percent rate because of excessive deductions. So, under the current system “we lose out on both counts,” he said.
Comments are due on the plan within 15 days.
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