FICCI decries MAT rate hike, calls for 26 pc peak rate

NEW DELHI: Apex industry chamber FICCI on Sunday decried a 3 per cent hike in the Minimum Alternate Tax in Budget 2011, saying it over weighed the concessions in the corporate tax and the government should look at reducing the peak rate to 25.6 per cent from over 30 per cent now.

"...as the rates come down, the revenue growth is much sharper... the world around, the figure is 25.6 per cent. India should start considering to look at the same tax rate over a period of time... It would be more in line with international standards," FICCI President Rajan Mittal said.

On the hike in MAT rates, he said, "They (the government) have reduced the surcharge (on corporate tax) but increased MAT. It is a disappointment for the industry".

The Budget proposals announced last month, raised MAT to 18 per cent from 15 per cent, and cut surcharge on corporate tax to 7.5 per cent from 10 per cent.

Mittal said the reduction was "not at all" beneficial as the government had reduced surcharge, but hiked the MAT rate.

Pointing to several other areas that needed push for better economic growth, the new FICCI President said the Budget could have hiked the FDI limit in the insurance sector to 49 per cent from 26 per cent at present and opened up the multi-brand retail sector.

Mittal added that the government could have also extended more tax benefits for investments in sectors like agriculture, food processing and cold chains.

He said, however, that industry expects a more liberalised regime and better growth in 2010-11.