New Delhi: Government may not extend sunset clauses with regard to tax exemption and phase out investment-linked and area based deductions as part of exercise to reduce corporate tax to 25 per cent from 30 per cent over the next four years.
“The provisions having a sunset date will not be modified to advance the sunset date. Similarly, the sunset dates provided in the Act will not be extended,” the CBDT said while unveiling the proposed roadmap for phasing out of deductions under the Income Tax Act.
It has invited comments on the proposal withing 15 days. In case of tax incentives with no terminal date, a sunset date of March 31, 2017 will be provided either for commencement of the activity or for claim of benefit depending upon the structure of the relevant provisions of the Act.
Finance Minister Arun Jaitley had announced in his last Budget speech that the rate of corporate tax will be reduced from 30 per cent to 25 per cent over the next four years along with corresponding phasing out of exemptions and deductions. This, he had said, was a step towards simplification of tax laws, which is expected to bring about transparency and clarity.
The Central Board of Direct Taxes (CBDT) further said that “profit linked, investment linked and area based deductions will be phased out for both corporate and non- corporate tax payers”. Also, it added that there will be no weighted deduction for the purpose of computation of taxes from April 1, 2017 onwards.