Reduce effective tax rate to improve business climate: FICCI

Business Desk :
The Foreign Investors’ Chamber of Commerce and Industry (FICCI) on Wednesday demanded the reduction of the effective tax rate, as they found it to be too high.
Although the applicable corporate tax is 20% and 27.5% for the publicly traded and private limited company respectively, effective tax rate is much higher due to the implication of 30B, 82C (2) and deduction of tax at source, they said during a pre-budget consultation meeting with the National Board of Revenue, said a press release.
“Therefore, we are proposing to reduce the effective tax rate in conjunction with the tax rate in our neighboring countries,” they surmised. FICCI also recommended rationalization of tax deduction at source (TDS).
In certain cases, TDS is considered a minimum tax for that source of income. Even though the corporate tax is reduced to 27.5% after maintaining certain conditions, still the business is unable to reap the benefits, said Ficci president Naser Ezaz Bijoy.
He suggested using the DVS system to identify income and expenses which can be useful to rationalize TDS and eliminate TDS from the minimum tax provision gradually.
Regarding digitalization and integration, Bijoy appreciated some initiatives taken by NBR to digitize the regular routine work such as return submission, Acknowledgement and return submission confirmation, A- challan on TDS etc. He also expressed concern that the digitization process is very slow. He recommended implementing digitalization at all levels so that taxpayer’s hassle will be minimized, such as online hearing in assessment, CTA, TAT, ADR, etc.