New Delhi: Finance minister Arun Jaitley may reduce the minimum alternate tax (MAT) rate in his first full-fledged Union Budget to boost the growth of the manufacturing sector and bring in a new equity investment scheme in place of the Rajiv Gandhi Equity Savings Scheme (RGESS) to wean away investors from gold towards long term equity investment.
According to sources, these issues has been raised during inter-ministerial meeting and the finance ministry has been asked to slash MAT rate for the manufacturing sector. At present, the MAT is charged at 18.5 per cent. If we include, cess and surcharge, the effective rate will come up to 20 per cent.
It has been pointed out that a “high rate” of MAT neutralises any tax concession given to the industry to boost manufacturing in any segment.
During a pre-budget meeting with Jaitley, industry leaders raised the issue of reducing the MAT rate to help the manufacturing sector.
CII, president Ajay S Shriram had asked the minister to bring down MAT rate drastically to 10 per cent and developers and exempt units in SEZs from MAT.
He had said that investment allowance should be eligible for deduction while calculating MAT to boost capital formation in manufacturing.
