"To begin with, one percent cut in the corporate tax rate, gradual phasing out of accelerated tax depreciation and a sunset clause for the tax deductions, coupled with reduction in MAT, will set the tone for this year's Budget," KPMG (India) Partner Tax Vikas Vasal said.

Jaitley in his last Budget had announced phased reduction in corporate taxes over four years to 25 percent from present 30 percent, and also simultaneous withdrawal of exemptions.

Economic Laws Practice Partner Rohit Jain said since the government is pushing domestic manufacturing, in the next Budget it would be a challenge to do away with exemptions.

Currently, there are various tax concessions under the Income-Tax Act, 1961. The prominent ones are accelerated depreciation on various assets; weighted deduction for capital expenditure incurred on various projects; weighted deduction for expenditure incurred on manufacture or production of specified articles; expenditure incurred on scientific research; various skill development projects etc.

The basic rate of corporate tax in India is at 30 percent, which is higher than the rates prevalent in other major Asian economies, making domestic industry uncompetitive.

Moreover, the effective collection of corporate tax is about 23 percent after taking into account various exemptions.

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