Ease of Doing Business and Corporate Taxes

Amidst the growing trends of economic inequality in India, policy makers are continuing to endorse policies to reduce corporate income tax (CIT) rates and provide discretionary tax incentives to corporates in the name of ease of doing business. But evidence suggests, that India’s corporate tax rates are moderate in global comparison. Further, tax incentives are mostly ineffective to achieve its desired policy objectives whereas the corresponding revenue loss is huge. Given this scenario, and also considering huge requirement of resources for the social sector, India must phase out the ineffective tax incentives and abstain from slashing corporate tax rates any further.