Finance Minister P Chidambaram ruled out on Friday any reduction in corporate tax rates unless exemptions were removed, saying effective tax rate in India was already very low.
"Effective tax rate is not only moderate but very moderate... the effective tax rate in India is 19.2 per cent. Show me one Asian country, one ASEAN country which has an effective tax rate of less than 19 per cent," he said at a post-Budget interaction with Federation of Indian Chambers of Commerce and Industry members.
Pointing out that it is not the scheduled rate but the effective rate which matters, he said only if exemptions are removed effective tax rates on corporates will rise and there would be scope for moderation of tax rates.
Responding to a suggestion from a member that a committee should look into moderation of corporate tax rates, he said:
"While I welcome your offer to join a committee to examine what the moderation would be, that committee should also examine how effective tax rate can rise to ASEAN level."
Removal of ten per cent surcharge on corporate tax for small firms and companies was an indication that the government wants moderate taxes, he said.
"Twelve lakh small firms and companies have been immediately given relief of three per cent... that's an indicator of line we are pursuing for the future, we want taxes to moderate, we have moderated taxes, the moderation has applied this year to small firms and companies," he said.