Engineering Export Promotion Council (EEPC) of India has urged the Centre to extend lower corporate tax benefit to Limited Liability Partnerships (LLPs) and proprietary firms as it would make funds available with MSMEs and boost private investment cycle.
A body of direct tax professionals also sought for reduction of tax burden on individuals and requested the government to raise the income tax exemption limit at Rs 2.5 lakh to Rs 4 lakh per annum in the upcoming budget for 2022-23 fiscal.
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EEPC India Chairman Mahesh Desai claimed around 84 per cent of small businesses are being denied the benefit of lower corporate tax which was aimed at providing industrial units with more investible surplus. "If the tax cut is to kick start an investment cycle by leaving more money at the hands of business entities, then proprietary firms and LLPs should also get the benefit as they constitute the majority of the pie and this is required for the upliftment of MSMEs," he said.
The engineering export promotion body has requested the government as part of its pre-budget recommendation that the benefit of lower corporate tax should be extended to LLPs and proprietary firms as it "will make funds available with a large number of MSMEs thus speeding up private investment cycle which is instrumental to boost growth and jobs". In order to promote investment, a new provision was introduced from FY 2019-20, which provides any domestic company with an option to pay income tax at a 22 per cent rate, and also allows new Indian entities incorporated on or after October 1, 2019 making fresh investment in manufacturing, to pay the same at a 15 per cent rate subject to a condition that they will not avail any exemption or incentive.
"The effective tax rate for these companies is 25.17 per cent and 17.01 per cent inclusive of surcharge and cess. Also, such companies shall not be required to pay Minimum Alternate Tax," the EEPC said. Direct Taxes Professionals' Association representation committee chairman Narayan Jain advocated the abolition of Minimum Alternate Tax as complications are arising out of it.
"Instead exemptions and deductions should be clubbed," he added.
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