Kolkata, March 1 The effective corporate tax rate proposed by finance minister P Chidambaram will put India Inc under pressure while foreign companies in India will enjoy better tax rates, feel tax analysts and practitioners.

The increase of dividend distribution tax from 12.5% to 15% and education cess from 2% to 3% will increase the effective corporate tax rates.

Indian companies paid an aggregate of 41.82% tax last fiscal which included dividend distribution tax and corporate tax. Chidambaram's proposal to enhance it to 43.58% has put the Indian industry in a difficult situation, said Rahul Krishna Mitra, executive director of PricewaterhouseCoopers (PwC).

According to Somnath Ballav, executive director, PwC, Indian companies will face tough competition from international players owing to lowering of peak rate of customs duty from 12.5% to 10% ad valorem.

Ballav feels norms for customs and excise settlement cases have been tightened in the Budget. The settlement matters now will only be limited to settlement of admitted duty with power to waive or reduce only penalty and not the interest.

Moreover, as Chidambaram has put it, a customs or excise assessee can apply for settlement of cases only once. "This would have a significant impact on the industry," said Ballav.