Industry body urges to fix income tax, corporate tax and peak GST all at 15%

New Delhi, Nov 21 (Nirbhay Kumar-UNI) As Centre gears up to start consultation with industry for Union Budget, industry body PHDCCI has proposed to keep personal income tax, corporate tax and peak GST rate all at 15% in order to boost demand and investment in the country.
Speaking to UNI, PHDCCI President Pradeep Multani said that personal income tax should be cut to 15% from the peak rate of 35% now in order to increase disposable income of the people which would lead to push demand curve.
“As regards corporate tax, our view is that whether it is proprietorship, LLPs (limited liability partnerships) and corporates, whether old or new, there should be one uniform corporate tax of 15% across the board,” Multani said.
Offering mega concession to the industry, the central government had in September 2019 slashed corporate tax rates to 22% for domestic companies and 15% for new domestic manufacturing companies besides other fiscal reliefs. The total annual revenue foregone for the reduction in corporate tax rate and other relief were estimated at Rs 1,45,000 crore.
PHDCCI Chief said that personal income tax is currently very high in the country because the base is low which means fewer people are paying taxes.
“It is higher than almost all the advanced and emerging economies. But still our tax-to-GDP ratio is only 17%. In peer economies like China, Korea, Malaysia and Indonesia the average tax-to-GDP ratio is 22%,” he said attributing the low tax-GDP ratio in India to tax evasion.
“The tax evasion is high because of higher tax rates,” he noted.
Multani further said that the peak GST rate should not be more than 15% as the current highest slab of 28% tempts people to evade tax.
“If someone is buying a product worth Rs 100,000 and the peak GST rate of 28% is levied, then Rs 28,000 would be tax on that. If tax rate is so high, people would tend to evade tax,” he said.
In order to attract foreign investment and encourage domestic players to ramp up their businesses, Multani suggested effective implementation of single-window clearance and reduction in cost of doing business.
He proposed to the government to get an analysis carried out by experts on cost structure in China and provide a level-playing field to the Indian industry.
“Let government do the analysis of China. We don’t need even 0.1% extra. What we are saying that the incentives China is giving to its industry we should also get the same cost,” the PHDCCI Chief said.