Industry body Assocham asked the finance ministry to reduce corporate tax to 25 per cent from the existing rate of 30 per cent so that corporate India is left with more money to make big-ticket investments.
''Assocham has recommended reduction in the corporate tax from 30 to 25 per cent. This will result in generating more surpluses in the hands of companies, with the consequential impact on investments and growth,'' the chamber said on Wednesday in a pre-budget memorandum to finance minister Pranab Mukherjee.
The chamber said a liberalised taxation regime has been a long-pending demand of the corporate sector.
It said reduction of the corporate tax rate to 25 per cent would bring the tax regime in the country at par with that of developed Western nations and make the country's corporate sector more competitive globally.
''To be a competitive and attractive investment destination, our tax rates must be in tune with others. The trend world over has thus been to gradually bring down corporate tax rates. Especially in the recent years, global average corporate tax rate has come to around 25 per cent,'' Assocham said.
It also termed the contentious minimum alternate tax (MAT) ''redundant'' and called for its abolition. It added that if MAT cannot be abolished, the rate should be reduced from close to 20 per cent at present to 15 per cent.