New Delhi, June 23: The Confederation of Indian Industry (CII) wants the corporate tax rate cut to 30 per cent, basic exemption limit for income tax raised to Rs 1.5 lakh and the minimum alternate tax (MAT) for companies abolished.

The apex industry forum said, “Corporate tax rates prevailing in the neighbouring countries range from 0 per cent in case of Middle East, Thailand, Indonesia and South Korea to around 20 per cent in China. It puts Indian companies at a disadvantage for re-investing into its business and improving competitiveness.”

Urging the government to rework the income-tax slab, CII has sought for raise in basic exemption limit to Rs 1.5 lakh from the present level of Rs 50,000. It has suggested a three-slab structure: 10 per cent tax on income between Rs 1.5 lakh and Rs 3 lakh, 20 per cent for income between Rs 3 lakh and Rs 5 lakh, and above 30 per cent for income above Rs 5 lakh.

The chamber has said the additional 2.5 per cent surcharge on income exceeding Rs 8.5 lakh should be removed.

It has also articulated India Inc’s long-standing demand that the dividend distribution tax — which is viewed as double taxation (either in the hands of the recipient or as tax on companies that distribute profits as dividends) — should be removed.

“The reintroduction of this tax points towards the government’s unstable tax policy. Further, it should come out with clear guidelines related to the dividend tax policy for mutual funds,” CII said.

Indian industry has also asked for exemption on long-term capital gains tax, seeking extension of the provision and making it applicable to all listed equities.

The chamber has initiated for reintroduction of investment allowance section 32 (A), which was withdrawn by the Finance Act, 1990.

In order to be eligible for depreciation allowance, CII has recommended ‘goodwill’ to be included within the definition of intangible assets.

In accounting parlance, ‘goodwill’ is recognised as intangible assets arising out of the difference between the business purchase price and the net assets of the company in a merger or acquisition transaction.

“We believe that extending the benefit of depreciation to the goodwill arising out of mergers and acquisitions will augment growth and development of Indian industry through the encouragement of strategic alliances,” CII said.

The industry has also asked for extending tax holiday under section 80-1B (8A) to all Indian research and development companies by the DSIR on or before March 2010.

As per recommendations given by CII, Indian industry has asked permission for group companies to be allowed to consolidate their financial statements and consolidated IT returns.