Corporate Taxation in India-Some Aspects

Some Aspects G Narayanan Liberal investment allowances, as allowed under our system of corporate taxation, combined with high marginal tax rates go to subsidise non-profitable investment. Besides, tax subsidies relat- ed to the cost of equipment also distort the choice of techniques by companies. Finally, it is the established company with taxable income from its existing operations which gets the full benefit of investment allowances, whereas a new company which has a long gestation period may have to wait for many years before tax relief becomes effective.