In his Budget Speech this year, the Finance Minister had indicated that the rate of corporate tax will be reduced from 30% to 25% over the next four years along with corresponding phase-out of exemptions and deductions. This was a step to simplify the tax laws, making them clearer and more transparent. The Government proposes to implement its decision in the following manner –
- Profit linked, investment linked and area based deductions would be phased out for both corporates and non-corporate taxpayers.
- The provisions having a sunset clause would not be further modified to advance/ extend the sunset date.
- For incentives that do not have a terminal date, a sunset date of 31 March 2017 would be provided either for commencement of activity or for claim of benefit depending on the structure of the provision in the Income-tax Act, 1961.
- No weighted deduction with effect from 1 April 2017.