Budget 2018,FM Arun Jaitley is likely to cut corporate tax rate, says Bharat Iyer of JP Morgan

Budget 2018,FM Arun Jaitley is likely to cut corporate tax rate, says Bharat Iyer of JP Morgan

India News

Budget 2018: Ahead of Union Budget 2018, even as top market voices and experts share their expectations from Finance Minister Arun Jaitley, Bharat Iyer of JP Morgan says that the government is likely to cut corporate tax rate. Interestingly, that a corporate tax cut is on the cards, seems to be the consensus industry expectation. A recent survey conducted by Deloitte found that more half of the professionals expect a 5% cut in corporate tax to 25 per cent in the upcoming union budget. While experts are expecting that the Budget is going to be focused on rural population, corporate India has also been continuously putting forward its demand of lower corporate tax rate, which was promised earlier by Finance Minister Arun Jaitley in his first full year Budget.According to the survey by Deloitte, which covered 120 professionals across sectors, nearly 50 per cent feel that tax reforms, particularly tax litigation, should be the most critical priority for the government in Budget 2018. “Half of the survey respondents (50 per cent) expect corporate tax rate to be reduced to 25 per cent from 30 now to all companies as was committed earlier,” the survey said. Given the strict measures taken by government around curbing black money, it may be the appropriate time to reduce the tax rate,” the survey said.Earlier, a report by HDFC Securities had pointed out that Finance Minister Arun Jaitley could cut the corporate tax rate. “On the corporate level Corporate tax rate may be cut to 25% for companies with annual sales of upto Rs.200 crore (vs Rs.50 crore earlier) (Realistically, a step-down in the corporate tax rate may be introduced only in conjunction with paring of exemptions, to maintain revenue neutrality), Corporate tax rate on insurance companies may be hiked gradually from the current 12.5%+SC over few years to match with the normal corporate tax rate, IBC cases – clarification/legislation expected on treatment of tax including MAT on writebacks,” HDFC Securities said in a note.Apart from a corporate tax cut, Bharat Iyer says that indirect taxes are unlikely to see major changes in the Union Budget. Since the implementation of the Goods and Service Tax (GST), more than 12 different taxes including VAT, Excise Duty got subsumed, hence, leaving little room for the Budget manoeuvre under different indirect tax heads. Any decision on indirect tax on goods and services is now taken by the GST Council.Sharing his expectations from the Budget, Bharat Iyer told ET Now, “Indirect taxes are unlikely to see major changes due to GST. Reduction in corporate tax rate is a possibility. Expect focused expenditures in priority areas in the budget.”