Tax Cut The First Step Of Reforms

Finance Minister Nirmala Sitharaman’s latest announcement to cut basic corporate tax to 22 per cent from 30 per cent, amid other tax-related structural changes — for domestic companies that currently don’t avail any tax exemptions — was well-received by India Inc.

- Deepanshu Mohan

Finance Minister Nirmala Sitharaman’s latest announcement to cut basic corporate tax to 22 per cent from 30 per cent, amid other tax-related structural changes — for domestic companies that currently don’t avail any tax exemptions — was well-received by India Inc.

Push for markets

The ‘bold’ move is being welcomed in context of the dismal private investment climate prevailing across most sectors of the economy that has slowed down manufacturing growth and also hit the Government’s ‘Make in India’ plan. To boost fresh investments in manufacturing, the finance minister slashed corporate income tax to 15 per cent (from 25 per cent) for domestic companies incorporated on or after October 1, 2019 and likely to commence their production on or before March 31, 2023. They are also not required to pay the Minimum Alternate Tax (MAT), paying an effective tax rate of approximately 17 per cent (including all surcharge and cess).

Further, in case of capital markets, to increase the flow of funds and undo ‘increased surcharge’ on capital gains imposed during this year’s Union Budget, the government has decided to roll back this surcharge.