SME tax reductions will boost growth
Tax reduction for SMEs and tax exemptions for targeted sectors are
most welcome, said Tax Consultant and Partner Gajma and Co, N.R.
Gajendran. “Yet it is mind boggling how blanket exemptions can be given
for strategic projects for a long period of time – 25 years, which
itself, may exceed the life span of some of these projects. This has
challenged revenue,” he said.
From a tax policy perspective, we have consciously reduced the rates
of tax, focused on SMEs and strategic projects. These decisions do not
definitely boost revenue. Nevertheless, tax reductions for small and
medium scale businesses and targeted sectors will help boost growth of
During the past few months, there was a slack in general trade and
business activity. This itself will have an impact on revenue
collection. The tax policy has certainly been business-friendly and
thlis may have had a negative effect on tax revenue. This does not mean
that there has to be a change or reversal in the tax policy.
He said that indirect tax is a consumption tax which contributes
significantly towards tax revenue. A greater proportion of the tax
revenue comes from indirect tax. A word of caution on indirect tax and
revenue is the
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