Mumbai: The government’s recent decision to levy corporate tax of 25% on companies with turnovers of up to ₹250 crore could see bigger firms trying to take advantage of the reduced tax rate, feel financial experts.
According to Apurva Shah, Chartered Accountant and partner at Rajendra & Co, bigger firms could merge with smaller companies eligible for the 25% corporate tax bracket. Speaking at the ICSI-WIRC Corporate Tax Conclave on Saturday, Mr. Shah said the decision, a step forward in the Finance Ministry’s bid to reduce corporate tax rate across the board from 30% to 25% by 2019, has left space for ambiguity as the plan is unclear.
He said as taxes constitute around one-third of the annual turnover, it is essential for a firm to know its exact implications before investing in projects. Ankur Alya, Joint Commissioner, Direct Tax, called upon company secretaries to join the civil services in large numbers to help in bringing about better tax compliance. “I urge all of you to at least consider attempting the examination for civil services. It doesn’t matter if you pass or fail, just the process of studying for it will make you more intelligent and put you far ahead of your peers.”
Mr. Alya added that company secretaries could potentially bridge the gap between the high demand and low supply of Chartered Accountants, since they already study taxation as part of their syllabus. He also emphasised the need for a taxation module to be added to their articleship for better practical knowledge on the subject.