NEW DELHI: India Inc wants the new government to remove the Minimum Alternate Tax (MAT) and replace it with a simpler one as is currently applicable to non-corporates at a lower 10 per cent rate. It also wants the corporate tax rate to be brought down to 25 per cent.
These tax changes were sought by a FICCI delegation led by Rajan Bharti Mittal, managing director of Bharti Enterprises, which met revenue secretary Ajay Bhushan Pandey on Friday. Currently, firms with a turnover of up to Rs 250 crore enjoy a lower tax rate of 25 per cent, while those with turnover of over Rs 250 crore have to pay 30 per cent corporate tax.
Industry doyen Adi Godrej had also similarly sought reduction of corporate tax to a uniform 25 per cent on Thursday. Moreover, a delegation from the Confederation of Indian Industry (CII) is also slated to meet finance secretary Subhash Chandra Garg, who also doubles up as the economic affairs secretary, on Monday, to list its demands. Sources said that CII too will be seeking reduction in MAT and corporate taxes.
The demand for a simpler or lower form of MAT is not new but has in the past not been agreed upon, as a significant amount of revenue would be foregone. The concept was introduced to target those companies that make huge profits and pay a dividend to their shareholders but pay zero corporate tax by taking advantage of various deductions and exemptions allowed under the Corporate Tax Act. But with the introduction of MAT, the companies have to pay a fixed percentage of their profits as Minimum Alternate Tax. MAT is currently about 18.5 per cent of the Book profits, besides surcharge and cess as applicable.