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:
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.
Source Ministry of Finance 26-February, 2016