World Trade Organization Organisation Mondiale du Commerce Organización Mundial del Comercio

KOREA, REPUBLIC OF

Republic of Korea 1:

Government Report, pages 17 18, paragraphs 49 51

Over the past few years, India has implemented reforms to rationalize and simplify its tax system. However, companies investing in India still have concerns over the uncertainty of tax burden caused by high tax rates, complex tax items, and discretionary tax administration, among others. Could the Indian government elaborate the efforts it is making to alleviate such concerns?

Reply: The consistent policy of the Government with regard to tax rates has been to levy moderate rates of tax on a wide tax base. The tax rates (inclusive of surcharge and cess) in the case of corporate tax payers have been moderated over the last two years. The tax rate for domestic companies for financial year 2009 10 was 33.99%. This has been gradually reduced to 33.2% for financial year 2010 11 and to 32.4% for financial year 2011 12. The Direct Taxes Code Bill, 2010, which is currently before Parliament proposes a corporate tax rate of 30% for domestic companies.

As part of economic reforms, tariffs have been lowered substantially in recent years. The tariff structure has been simplified considerably. However, this is an on going process. The present duty structure is simple though there are certain exemptions. It is Government's endeavour to gradually remove exemptions which are no longer relevant in the changed circumstances.

Steps have been taken to simplify the process of assessment of customs duties. With the adoption of the Electronic Data Interchange (EDI) system and automation of businesses, the rates of duty and exemptions are automatically determined. Further, greater reliance is being placed on automated processes (such as EDI, Risk Management System etc.) to reduce human intervention in business process.

India proposes to introduce a comprehensive goods and service tax to replace the existing system of domestic taxes both at the Centre (excise duties and services tax) and the States (state VAT, sales tax etc.). The Central Government has introduced a Constitution Amendment Bill in Parliament in February, 2011 to enable levy of this tax.