PHDCCI for rationalisation of corporate tax

NEW DELHI: The PHD Chamber of Commerce and Industry (PHDCCI) has asked the government to rationalise the effective corporate tax structure.

"As the system has matured, the government should lower the tax rates or withdraw surcharge and education cess," the Chamber said in its Pre-Budget Memorandum to the government.

To facilitate mergers and aquisitions activity across sectors among domestic companies, to bring about tax neutrality and make Indian companies more competitive, it asked for extension of the benefit of Section 72(A) to amalgamated companies in every case.

As per the existing law, the benefit of the section is restricted to the amalgamation between the companies, which fulfil the specified requirement.

The law relates to carry forward and set off of unabsorbed losses and unabsorbed depreciation of the amalgamation to the amalgamated company.

The chamber has also asked the government to enhance the rate of depreciation to 33.3 per cent.

The concept of free floating depreciation could be considered in this regard, it said.

It also demanded the withdrawal of the Dividend Distribution Tax and said that necessary amendments should be made such that it does not lead to a cascading effect, particularly considering that the new corporate law in the offing envisages pyramid structure of holding.

Emphasising the need to bring down the compliance costs, the chamber said it would require revisiting many direct taxes and provisions.