Arun Jaitley has re-introduced long-term capital gains tax of 10 per cent. Companies with turnover of up to Rs 250 crore have got corporate tax relief.
Mumbai: Despite the Narendra Modi-led government’s ambitious push to boost investments in India, the tax structure proposed by the government in its last full budget ensures that the country will not remain competitive for attract investment, Godrej Group chairman Adi Godrej said.
Speaking to ThePrint, Godrej said the capital gains tax on long-term gains in the stock market and corporate tax rates are the biggest disappointments of the Union Budget for 2018-19.
“I think expectations have not been met. Taxes are still high on most companies in terms of the number of tax payers. We are not competitive. America has reduced taxes, the United Kingdom has reduced taxes. We want to invite people to invest in India, but we are not competitive,” Godrej said.
Finance minister Arun Jaitley Thursday re-introduced the long-term capital gains tax of 10 per cent for gains of more than one lakh rupees on the sale of investments in the stock market and equity mutual funds. All gains up to 31 January 2018 will be grandfathered (exempt). The short-term capital gains tax on profits on such investments below one year will remain at 15 per cent.
“The changes announced for the agriculture sector will do the economy good, but overall I am not very pleased with the budget,” said Godrej. “Now, we are one of the highest corporate tax countries in the world. There are high corporate tax rates, the dividend distribution tax, various surcharges.”
In the budget, Jaitley gave a reprieve in corporate tax to smaller companies by lowering the rate to 25 per cent for companies with a turnover of up to Rs 250 crore. The government had, in the 2017-18 budget, reduced corporate tax rates to 25 per cent from 30 per cent for companies with a turnover of up to Rs 50 crore. However, the finance minister retained the 30 per cent corporate tax rate for companies with a higher turnover.
Godrej said: “Although the government says that 99 per cent of the companies will now be taxed at 25 per cent, these are all really small companies.”
He added that this budget was populist to a certain extent, with a healthy allocation for agriculture and infrastructure. But he reiterated that the country needs to be more competitive.