MUMBAI - India has unveiled details of its plan to phase out some tax exemptions for companies as the government looks to simplify tax laws and make them transparent before it lowers the tax rate.
Over four years, the government plans to lower the corporate tax rate to 25 per cent from 30 per cent, Finance Minister Arun Jaitley said in his budget speech in February. During that period, exemptions and deductions will be phased out.
Profit-linked, investment-linked and area-based deductions will be phased out for both corporate and non-corporate tax payers, according to a document posted on the tax office's website late on Friday.
For tax incentives with no set date of termination, the government will set March 31, 2017 as the so-called sunset date, the tax office said.
This will apply to development, operation and maintenance of infrastructure facilities, development of special economic zones as well as commercial production of natural gas and mineral blocks, according to the document.
Gokul Chaudhri, head of the direct tax practice at BMR & Associates LLP in New Delhi, said the industry "would have"hoped for a lengthened and staggered phase-out of incentives, especially for capital-intensive and long-term projects in fields such as power and upstream oil and gas.
The government has asked for stakeholder comments on the proposals within 15 days.