"Corporate income tax rate reduction does not seem likely in light of the fiscal constraints and subdued GST collection. However, government may rationalise the effective corporate tax rate by abolishing dividend distribution tax and restoring the classical system of taxation of dividends in the hands of shareholders," said EY India Partner & National Leader, Business Tax Services, Garima Pande.
In Budget 2015-16, Finance Minister Arun Jaitley had said that the basic rate of corporate tax in India at 30 per cent is higher than the rates prevalent in other major Asian economies, making domestic industry uncompetitive, and it would be brought down to 25 per cent over four years.
Industry body CII has also sought rationalisation of the dividend distribution tax rate to 10 per cent in the upcoming Budget to encourage participation of different stakeholders in the country's financial markets.
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