Another move by the government to boost the plummeting economy of India
Finance Minister Nirmala Sitharaman, on September 20, 2019, announced major changes in the corporate income tax rates to revive growth in economy.
The government has deduced the basic corporate tax rate from 30 percent to 22 percent for all domestic companies that don’t avail any exemption or incentives. Inclusive of cess and surcharges, the effective corporate tax rate for these companies has been slashed down to around 25.17 percent.
The government has further reduced the corporate tax rate to 15 percent from 25 percent for those companies set up after October 1, 2019 and their effective corporate tax rate will be 17.01 percent inclusive of cess and surcharges.
Sitharaman said that the corporate tax rates will also be reduced for the foreign firms that have Indian subsidiaries or joint ventures with Indian companies.
“The step to cut corporate tax is historic. It will give a stimulus to #MakeInIndia attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 1.3 billion Indians,” Modi said on twitter.
Mukesh Aghi, president of the U.S – India Strategic Partnership Forum said that the move will make Indian companies globally competitive and allow global companies a good option for growing their manufacturing base-in country.
The goal of this measure taken by the governmnet is mainly to attract investors, restore their confidence and boost demand. Indian economy has been going through the worst deceleration in the last couple of years. The government has been intending to make major turnaround in the policies to revive the economy. On August 23, 2019, Sitharaman made a slew of announcements to boost the economy that had been slumping down.
Indian auto sector executives welcomed the move by the government which would boost investment. The sector has sharply dropped for straight 10 months leading to lots of job losses.
RBI Governor Shaktikanta Das said that the move augurs “extremely well” for the economy.
