Kailash Kumar
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India slashes corporate taxes to give a boost to economy
Amy Kazmin
3 HOURS AGO
India unveiled a $20bn package of corporate tax cuts on Friday sparking the biggest one-day jump in Bombay’s stock market in a decade, as the government of Narendra Modi looks to revive economic growth that has tumbled to a six-year low.
In major fiscal stimulus, Nirmala Sitharaman, finance minister, slashed corporate tax rates to the lowest levels in India’s post-independence history in a bid to lift the gloom that has enveloped the business community and boost India’s appeal to foreign investors.
New Delhi cut its basic corporate tax rate from 30 per cent to 22 per cent, meaning the effective corporate tax rate — including surcharges and cesses — will drop from 34.94 per cent at present to 25.17 per cent.
New manufacturing companies will be treated more favourably. Their basic tax rate will be cut from 25 per cent to 15 per cent if they incorporate after October 1 and commence production by March 31 2023. The effective tax rate for companies fulfilling these criteria will be 17 per cent.
The BSE Sensex was up 6.2 per cent in mid-afternoon trading. Mr Modi called the tax cuts a “historic” move that will boost India’s appeal as an investment destination.
The cuts, he tweeted, “clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity”.
Analysts said that the move — which Ms Sitharaman said will see the government forgo an estimated $20bn a year in revenues — will provide a major boost to struggling businesses in a move that New Delhi hopes will lead to a revival in private investment.
The business community hailed the tax cuts as a transformative step that would revive flagging confidence and animal spirits. “This is the best move ever,” Kiran Mazumdar-Shaw, chief executive and founder of Bangalore-based Biocon, a pharmaceutical company, told an Indian television channel. “This will kick-start the economy.”
Uday Kotak, chief executive of Kotak Mahindra Bank, called the cuts a “big bang reform” and a “a bold progressive step forward”.
He tweeted the lower tax rate allows “Indian companies to compete with lower tax jurisdictions like the U.S. It signals that our government is committed to economic growth and supports legitimate tax abiding companies.”
But even as equity markets rallied, investors sold off Indian bonds, causing yields to surge to 6.8 per cent amid concerns that the government would struggle to meet its fiscal deficit target of 3.3 per cent of gross domestic product.
Analysts said that the deficit was likely to rise to about 4 per cent of GDP, unless the government announced parallel spending cuts.
Indian businesses have long complained that the country’s onerous tax burden makes it tough for them to compete with companies based in other emerging markets.
Ms Sitharaman said that India’s corporate tax regime would now be “almost at par with many of the Asian and south-east Asian countries”.
Nilesh Shah, managing director of Kotak Mahindra Mutual Fund, said the cuts for new manufacturing investment was a “master stroke” that would help India woo companies looking for an alternative to China amid rising trade tensions between Beijing and Washington.
India’s economic growth has slowed for five consecutive quarters, tumbling to just 5 per cent year on year in the April to June quarter, its lowest level in six years. Consumer spending growth has also slowed sharply, as incomes have failed to rise and private investment has been muted for years.
Despite Mr Modi’s landslide re-election victory in May, the business community had expressed gloom and disappointment with his administration’s record on economic management.
https://www.ft.com/content/ad7ad838-db69-11e9-8f9b-77216ebe1f17
Amy Kazmin
3 HOURS AGO
India unveiled a $20bn package of corporate tax cuts on Friday sparking the biggest one-day jump in Bombay’s stock market in a decade, as the government of Narendra Modi looks to revive economic growth that has tumbled to a six-year low.
In major fiscal stimulus, Nirmala Sitharaman, finance minister, slashed corporate tax rates to the lowest levels in India’s post-independence history in a bid to lift the gloom that has enveloped the business community and boost India’s appeal to foreign investors.
New Delhi cut its basic corporate tax rate from 30 per cent to 22 per cent, meaning the effective corporate tax rate — including surcharges and cesses — will drop from 34.94 per cent at present to 25.17 per cent.
New manufacturing companies will be treated more favourably. Their basic tax rate will be cut from 25 per cent to 15 per cent if they incorporate after October 1 and commence production by March 31 2023. The effective tax rate for companies fulfilling these criteria will be 17 per cent.
The BSE Sensex was up 6.2 per cent in mid-afternoon trading. Mr Modi called the tax cuts a “historic” move that will boost India’s appeal as an investment destination.
The cuts, he tweeted, “clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity”.
Analysts said that the move — which Ms Sitharaman said will see the government forgo an estimated $20bn a year in revenues — will provide a major boost to struggling businesses in a move that New Delhi hopes will lead to a revival in private investment.
The business community hailed the tax cuts as a transformative step that would revive flagging confidence and animal spirits. “This is the best move ever,” Kiran Mazumdar-Shaw, chief executive and founder of Bangalore-based Biocon, a pharmaceutical company, told an Indian television channel. “This will kick-start the economy.”
Uday Kotak, chief executive of Kotak Mahindra Bank, called the cuts a “big bang reform” and a “a bold progressive step forward”.
He tweeted the lower tax rate allows “Indian companies to compete with lower tax jurisdictions like the U.S. It signals that our government is committed to economic growth and supports legitimate tax abiding companies.”
But even as equity markets rallied, investors sold off Indian bonds, causing yields to surge to 6.8 per cent amid concerns that the government would struggle to meet its fiscal deficit target of 3.3 per cent of gross domestic product.
Analysts said that the deficit was likely to rise to about 4 per cent of GDP, unless the government announced parallel spending cuts.
Indian businesses have long complained that the country’s onerous tax burden makes it tough for them to compete with companies based in other emerging markets.
Ms Sitharaman said that India’s corporate tax regime would now be “almost at par with many of the Asian and south-east Asian countries”.
Nilesh Shah, managing director of Kotak Mahindra Mutual Fund, said the cuts for new manufacturing investment was a “master stroke” that would help India woo companies looking for an alternative to China amid rising trade tensions between Beijing and Washington.
India’s economic growth has slowed for five consecutive quarters, tumbling to just 5 per cent year on year in the April to June quarter, its lowest level in six years. Consumer spending growth has also slowed sharply, as incomes have failed to rise and private investment has been muted for years.
Despite Mr Modi’s landslide re-election victory in May, the business community had expressed gloom and disappointment with his administration’s record on economic management.
https://www.ft.com/content/ad7ad838-db69-11e9-8f9b-77216ebe1f17
demonetization to crub parallel economy and then unearthing the scams khangress committed by looting the banks , and fixing the same by recapitalization of banks was not real reform ? 
promoting and facilitating the last man to participate in mainstream economy was not real reform ?
. digital india and make in india initiatives are not real reform steps taken by the government ?
