Budget 2015: Finance Minister cracks whip on ‘exemption raj’

Mumbai: Finance Minister Arun Jaitley on Saturday while presenting the Union Budget 2015 in the Lok Sabha cracked the whip on ‘exemption raj’, saying it harms the growth of the country.

Jaitley while presenting his Budget speech, said that the Goods and Services Tax (GST), would be amended after introducing a bill in the Parliament in 2015.

The government also intends to implement GST is various forms and in various fields from 2016. "The Goods and Services Tax is expected to play a vital role in developing the economy," said Jaitley.

Jaitley said that the rate of Corporate Tax is 30 per cent, which is considerably higher than other Asian countries.

This makes India uncompetitive to other global players. Jaitley elaborating on India’s taxation system, said that the taxation limit is high in India. However, exemptions and lee ways are causing losses to the exchequer. Jaitley blamed ‘exemption raj’ created by former governments for the same.

To counter unnecessary exemptions, the Finance Minister intends to reduce the rate of Corporate Tax to 25 per cent.

Elaborating on his move, Jaitley said that a process of reduction has to be accompanied by rationalization and removal of exemptions. He also proposed a phased reduction of Corporate Tax over the next 4 years. Advance notification of such changes will be issued and the reduced rate will be applicable from 2016.

However, individual tax payers will continue to receive legitimate exemptions as they promote and encourage savings.