Govt needs to reduce income tax rates to boost economy: E&Y
The government, as part of the stimulus packages to boost the economy, had reduced indirect taxes but did not announce any changes in the direct tax rates.
By PTI |
NEW DELHI: Setting the agenda for the new government, global consultancy firm Ernst and Young on Monday said that the government should reduce corporate and personal income tax rates to boost the economy facing the ripple effects of global financial meltdown.
"The new government would do well to introduce measures such as providing for carry back of losses, possible reduction in corporates and personal tax rates -- perhaps by doing away with surcharge," the tax consultancy firm said in its study on key tax trends in fiscal stimulus packages across the world.
The government, as part of the stimulus packages to boost the economy, had reduced indirect taxes but did not announce any changes in the direct tax rates.
In view of the general elections, the government came out with an interim budget in February for fiscal 2009-10. The final budget will be tabled in Parliament by the new government after completion of the ongoing general elections.
Referring to the steps that the new government should initiate in the final budget, the E&Y report said, "While we have seen in the past tax policy measures such as streamlining of tax rates, increase tax depreciation ... progressive measures must also be introduced."
Making a case for provision of carry back of losses, Ernst & Young's tax policy services partner Satya Poddar said the government should allow the companies to seek tax refund for the tax paid in previous years.
The provisions relating to carry back of losses are there in some developed countries like the UK, he said, adding India tax laws allow only carry forward of losses.
"Permitting Indian companies to carry back losses will help them to optimise their cash flows", Poddar said.
"The new government would do well to introduce measures such as providing for carry back of losses, possible reduction in corporates and personal tax rates -- perhaps by doing away with surcharge," the tax consultancy firm said in its study on key tax trends in fiscal stimulus packages across the world.
The government, as part of the stimulus packages to boost the economy, had reduced indirect taxes but did not announce any changes in the direct tax rates.
In view of the general elections, the government came out with an interim budget in February for fiscal 2009-10. The final budget will be tabled in Parliament by the new government after completion of the ongoing general elections.
Referring to the steps that the new government should initiate in the final budget, the E&Y report said, "While we have seen in the past tax policy measures such as streamlining of tax rates, increase tax depreciation ... progressive measures must also be introduced."
Making a case for provision of carry back of losses, Ernst & Young's tax policy services partner Satya Poddar said the government should allow the companies to seek tax refund for the tax paid in previous years.
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The provisions relating to carry back of losses are there in some developed countries like the UK, he said, adding India tax laws allow only carry forward of losses.
"Permitting Indian companies to carry back losses will help them to optimise their cash flows", Poddar said.
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