LI Network
Published on: February 6, 2024 at 10:00 IST
Revenue Secretary Sanjay Malhotra has defended the current corporate taxation structure, stating that the 22 per cent tax rate is considering the size of India’s economy.
Consequently, the concessional tax regime for new manufacturing units, which had been in effect for four years, was not extended beyond March 2024.
In an interview with PTI, Malhotra highlighted the continuity in the taxation regime provided by the Interim Budget 2024-25, emphasizing the positive impact of previous benefits on taxpayers, particularly in terms of significant growth in personal income tax revenue.
Malhotra underscored the government’s focus on taxpayer services, including rationalization, simplification, and trust-based taxation, aiming for less scrutiny and more targeted assessments aided by technology. He expressed optimism that these efforts would enhance compliance and improve tax collection efficiency.
Responding to queries about the non-extension of the concessional tax regime for corporates, Malhotra explained that the scheme, initiated in 2019, provided ample time for companies to establish new units and benefit from the concessional tax rate. He noted that the extension until March 31, 2024, was granted due to the COVID-19 pandemic, recognizing the long gestation period required for such investments.
Malhotra reiterated the reasonableness of the existing corporate tax rate of 22 per cent in proportion to the country’s economic size, affirming the decision to sunset the concessional regime.
He also reminded that new manufacturing companies commencing operations before March 31, 2024, would still enjoy the benefits under the scheme.
In 2019, the government had announced a reduction in the base corporate tax rate to 22 per cent for existing companies and 15 per cent for new manufacturing firms incorporated after October 1, 2019. However, companies opting for these rates had to forgo all exemptions and incentives.
Additionally, the Interim Budget introduced measures to withdraw outstanding small tax demands, dating back to 1962, amounting to up to Rs 25,000 till 2014-15, related to income, wealth, and gift taxes. Malhotra noted that these measures aim to enhance tax administration by addressing non-reconciled tax demands.
The move reflects the government’s commitment to a rational and balanced tax regime conducive to economic growth and compliance.