Business & Economy

Budget may cut corporate tax 

What is India News Service, Saturday, 29 January 2005, 2100 hrs IST

The government is actively considering a series of fiscal reforms in this year\92s Budget (2005-06), including a possible reduction in corporate income tax rates to 30 per cent from the existing level of 35 per cent. 

A cut in corporate income tax rates to 30 per cent would integrate it with the peak rate of personal income tax, which also stands at 30 per cent. This would be in line with the recommendations made by the Kelkar Task Force.

However, the reduction in tax rate is expected to come along with fewer exemptions. The thinking within the government is that while a reduction in tax rates would improve tax compliance, removal of exemptions will eliminate tax-induced distortions. It would also widen the tax base and curb evasion.

A cut in personal income tax rates appears unlikely as of now, though officials maintained that there was some scope for a cut in these rates provided the present exemption limit was reduced. A phased reduction in income tax exemption limit would not, however, be a politically correct decision at this point of time, sources said.

Currently, the corporate tax rate in India is 35 per cent for domestic companies and 40 per cent for foreign companies. In addition, a surcharge at the rate of 2.5 per cent thereon is also payable plus the 2 per cent education cess.

The effective tax rate for domestic companies thus comes to 36.6 per cent and for foreign companies it is 41.8 per cent.

Inflationary pressures contained in run up to Budget: Inflationary pressures on the economy appear to have been contained in the run up to the union Budget with the wholesale price index showing a rise of only 5.42 per cent for the week ending January 15.

Sensex vaults 180 points to cross 6,400 mark: The stock market indices recorded their biggest gains of 2005 today as large interest from foreign institutional investors triggered fresh buying interest in the Indian markets.

ONGC Q3 profit surging on oil prices: Record-high oil prices will have helped exploration and production group Oil and Natural Gas Corp Ltd, India's most valuable company, more than double its quarterly profits, despite a big subsidy bill.

Xerox in distribution tie-up with Salora: Xerox Modicorp on Friday announced a distribution tie-up with Salora International for its entire range of laser printers, facsimile and multifunction devices in India. 

Saregama announces alliance with MGM Studios: Saregama India Ltd on Friday announced a strategic alliance with global player MGM Studios for marketing modern Hollywood films in the Indian market.

Private PFs can invest in equity: Private provident funds (PFs) have been allowed to invest five per cent of their assets in shares of blue-chip companies and 10 per cent in corporate debts and equity-oriented mutual funds from April 2005.

P&G strikes $57 billion deal with Gillette: The Procter & Gamble Co. is buying shaver and battery maker Gillette Co. for $57 billion (euro43.8 billion) in a deal that would create the world's largest consumer-products company. 

A-I, IA to launch IPO next fiscal: A day after the government decided to hold back sale of equity in Bhel and Maruti and set up a National Investment Fund from the proceeds of disinvestments, public sector carriers Air-India (A-I) and Indian Airlines have been told to start working towards the launch of an IPO.

Novartis to sell unit to Sandoz: Pharma company Novartis India said it intended to sell its anti-TB rifampicin bulk drug business together with its Mahad facility to Sandoz Pvt. Ltd. for an estimated amount of Rs. 30.77 crores. 

Award for Mudra: Mudra Advertising on Friday said that it had won the "Silver World Medal Award" for advertising and marketing effectiveness in the prestigious AME Awards in New York.

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