JOIN USThe government on Thursday asked the industry to support the attempt to implement General Anti Avoidance Rules (GAAR), announced in the Budget, by 2017. GAAR is a set of rules enacted to check tax avoidance.
Revenue Secretary Hasmukh Adhia, in a post-Budget interactive session of the PHD Chamber of Commerce, also confirmed that Minimum Alternate Tax (MAT) rates cannot be brought down at this juncture, as the government has already kept sufficient space for corporates to enjoy tax exemptions in other forms.
“GAAR implementation by the government ought to happen as scheduled, as foreign institutional investors and such other portfolios have been escaping capital gains in one form or the other, keeping the domestic industry at disadvantage and, therefore, it should come out openly in support of the government to implement it as scheduled,” Adhia said.
Last year, Finance Minister Arun Jaitley had deferred applicability of GAAR by two years.
Referring to the issue of MAT, the Revenue Secretary held that its existing rates cannot be curtailed as industry is being provided with so many exemptions in other forms, and the government has already done the balancing exercise in a planned and meticulous manner and, therefore, seeking to reduce the MAT ceiling would not be opportune at this juncture.
On the issue of corporate tax reduction as promised by Finance Minister Arun Jaitley, while presenting the Budget proposals of last fiscal, Adhia clarified that if the finance ministry curtailed general corporate tax by 1% in Budget proposals for 2016-17, it would mean a revenue loss of Rs 15,000 crore, which the government at this juncture could not afford due to prevailing adverse global conditions on account of which, exports have consistently suffered in the last couple of months.
However, the government has extended this benefit for new manufacturing units to avail of corporate tax facility at the rate of 25% from 2016-17, he pointed out adding that the Budget for 2016-17 has been exclusively designed to generate domestic demand with large allocations for spending in rural economy, especially in its agricultural, irrigation, power and infrastructure sector, since the global economic landscape is not yet favourable to absorb exports from developing nation such as India.