'Profit drop at top companies led to decline in corporation tax forecast'
Business Standard|July 25, 2024
Revenue Secretary SANJAY MALHOTRA says the revised projection for corporation tax in 2024-25 (FY25) reflects the decline in profits of the top 170 companies during the first quarter of the current financial year. In conversation with Shrimi Choudhary, the senior bureaucrat discusses several tax-related announcements in the Union Budget. Edited excerpts:
'Profit drop at top companies led to decline in corporation tax forecast'

Has the projection for corporation taxes been reduced?

There has been a modest reduction. Still, we are projecting a growth rate of about 10 per cent. This aligns with the growth rate achieved to date. The projection incorporates the decline in corporate profits of the top 170 companies for the first quarter (April-June) of FY25, excluding banks and the financial sector.

Including these sectors, there is an approximate increase of 4 per cent. For the 200 companies that reported profits, our growth rates are also reflective of this.

Central goods and services tax (GST) saw a reduction while excise duty saw an upward revision.

These adjustments are aligned with the growth rates observed over the past year.

What was the rationale behind revamping the capital gains regime?

The government, over the past few years, has been trying to simplify various tax provisions, starting with GST, which simplified the indirect taxation regime. Seen in light of that transformative change, this is another change we have introduced.

Revamping the regime has been a request from many stakeholders for some time, given the different rates and holding periods across asset classes. For instance, without indexation, the rate is 20 per cent, and with indexation, it is 10 per cent, and so on.

We have now drastically simplified it, primarily to two rates in long-term capital gains: 20 per cent and the applicable rates. Similarly, in short-term capital gains.

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