Reforms in Tax Rates
The details of the tax rates of the major countries of
Asia have been taken from the KPMG Report on Global Rates, 2015 and are
mentioned below:
|
Country
|
Corporate
|
Individual Income
|
|
Afghanistan
|
20
|
-----
|
|
Bangladesh
|
27.5
|
30
|
|
China
|
25
|
45
|
|
India
|
34.61
|
33.91
|
|
Japan
|
33.06
|
50.84
|
|
Kazakhstan
|
20
|
10
|
|
Malaysia
|
25
|
25
|
|
Pakistan
|
33
|
---
|
|
Singapore
|
17
|
20
|
|
Srilanka
|
28
|
24
|
In view of above, the Indian tax rates for direct taxes
are higher than the average tax rate among Asian countries.
As far as Indirect Taxes are concerned, tax to GDP ratio
during Financial Year 2014-15 was 4.4%.
Tax rates are higher because of exemptions and
deductions provided for in the Income Tax Act, 1961. Taking into account the
revenue foregone on account of these exemptions and deductions, the effective
rate of corporate tax works out to be around 23%.
Proposal to bring reforms in tax rates to reduce the
burden of tax payers is under consideration of the Government. In the Budget
Speech 2015, it was stated that the Corporate Tax rate would be reduced from
30% to 25% over the next four years along with phasing out of exemptions and
deductions.
This was stated by Shri Jayant Sinha, Minister of State in the
Ministry of Finance in written reply to a question in Lok Sabha today.
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