India Budget 2018
“India’s taxation environment was largely viewed as unfriendly and complex due to a high corporate tax rate coupled with exemptions which pushed the effective tax rate far from the statutory tax rate and accounted for a large number of disputes. While presenting the Union Budget 2015-16, a phased reduction of corporate tax rates from 30% to 25% with a corresponding phased withdrawal of exemptions was announced by the Finance Minister. The benefit of a reduced corporate tax rate of 25% was extended to corporations within a stipulated turnover threshold.
The Union Budget 2018-19 should continue the strategy of making India’s taxation system strong and transparent by slashing the basic corporate tax rate to 25% for all categories of corporates. Such reduction accompanied with fewer tax exemptions will undoubtedly make both, the tax law and tax administration simpler. At the same time, it will bring use of technology, analytics and data mining to the forefront.
Government’s focus has been to broaden tax base, increase tax certainty, reduce compliance costs and use data analytics. The corporations will need to respond by investing in the right tax technology solutions to meet and make the most of government initiatives and also use tax automation and data analytics to add much higher value to their businesses.
Mr Vinay Sethi is the Head, Market Development of Thomson Reuters, South Asia.