Making a strong case for removal of cess and surcharge of various types, Industry body Assocham has urged finance ministry for a clear road-map for reduction of corporate tax to 25%. The industry body stated that the surcharge and education cess were originally introduced for a short period of time but are being continued from year to year, which have pushed up the overall tax rate to over 34% and sought a time schedule for withdrawal of the surcharge and education cess as it would help in giving more funds to the corporate sector for investment and growth and also generate confidence and certainty. This in turn will result in overall buoyancy in the national economy. A clear road map will enable businesses to evaluate availability of funds for capital investments
With a view to help start-ups, Assocham stated that the reduced tax rate of 25% should also be made applicable for all companies and not only to manufacturing companies. This will provide a boost to the 'Start-up India' initiative and will bring newly set-up manufacturing companies as well as non-manufacturing companies on an equal footing as far as tax rates are concerned.
In the budget 2015-16, the government had announced that tax benefits, exemptions will be withdrawn and simultaneously, basic corporate tax rate will be reduced from 30% to 25% over a period of four years. Nevertheless, in this year's Budget, a road map has been given for withdrawal of various tax benefits/ exemptions but time plan for reduction of corporate tax rates were not announced.