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Sep 20, 2019 12: 58 PM IST | Source:Moneycontrol.com
Addressing her fourth press conference to revive the economy, the FM announced a cut in the corporate tax rate for domestic companies and new domestic manufacturing companies.
Rajiv Singh, CEO, Karvy Stock Broking:After a large number of minor measures, the government announced a bold and major measure to revive animal spirits. The high corporate tax rate meant that Indian companies were not competitive and this move helps address this and shall also boost FDI. The effective tax rate now stands at 25. 17 percent, and for new companies the effective tax rate will be 17 percent. The measure is thus a boost for startups as well. Additionally, the finance minister also announced that there will be no tax on buybacks announced before July and no surcharge on capital gains as well. Reduction of corporate tax has been on the agenda for a while, and this should help in boosting the capex cycle, also it gives companies space to cut prices to boost demand. The corporate tax cut should go a long way in a revival of the economy.
The tax reliefs announced by FM Ms@ nsitharamanwill certainly prove to be a much-needed booster dose in tackling the current slowdown & regaining the growth momentum. Lowering of income tax on corporates is a longstanding FICCI request: Mr Sandip Somany, President,@ ficci_india.pic.twitter.com/r5VFvlG0r5
— FICCI (@ ficci_india) (September) , 2019
RBI Governor, Shaktikanta Das said government tax cut move today is ‘bold & welcome’
Das said that the decision to cut taxes highly positive for the Indian economy. He added that they are not oblivious of fiscal impact because of today’s steps and that there is a need to keep an eye out for financial stability. He added that there is some room for more reforms on land and labor and that the government must focus on quality of expenditure. Das said that he expects July-September GDP to be better due to government spending and that the bigger role in economic growth lies with the government. He pointed out that the tax rate cut announced today takes India closer to Asian peers.
Mahindra & Mahindra Managing Director Pawan Goenka took to twitter to share his views: Looks like Diwali has come early (sic)
Looks like Diwali has come
– Pawan K Goenka (@GoenkaPk)September 20, 2019
NITI Aayog CEO Amitabh Kant celebrated today’s annoucements. Tweeting: Brilliant move! Way to go! Will provide a major impetus to animal spirits. Congrats @nsitharaman (sic)
Brilliant move! Way to go! Will provide a major impetus to animal spirits. Congrats@ nsitharamanhttps://t.co/T0Rsa5tswP
– Amitabh Kant (@amitabhk 87) (September) , 2019
Indian economist and Congress (INC) member Jairam Ramesh however was less than enthused. He tweeted: A headline-itis afflicted, panic-stricken Modi Sarkar has cut corporate tax rates less than 3 months after a Budget and 4 months before the next one. This is welcome but it is doubtful whether investment will revive. This does nothing to dispel fear that pervades in India Inc. (sic)
A headline-itis afflicted, panic-stricken Modi Sarkar has cut corporate tax rates less than 3 months after a Budget and 4 months before the next one. This is welcome but it is doubtful whether investment will revive. This does nothing to dispel fear that pervades in India Inc.
– Jairam Ramesh (@Jairam_Ramesh) (September) ,
Titan CFO Subbu Subramaniam told CNBC-TV 18 that today’s moves could be “called Diwali” as cut in tax will directly impact earnings. “We will save four percent from rate cuts. With the effective tax rate 29 percent, the benefit will pass on to consumer. ” He added that demand will get a boost and large ticket consumption is significantly led by “mood of the economy”.
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