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quarter was 5 per cent. Analysts suggest been slashed to 22 per cent for domestic create more jobs and result in a win-win
that the economy will be unable to cre- companies and 15 per cent for domestic for 130 crore Indians,” he tweeted.
ate new jobs unless it grows by at least 8 manufacturing and other reliefs. The The announcements in the past few
per cent. The slowdown means there is current effective tax rate for companies weeks clearly demonstrate that our gov-
little possibility of new manufacturing is 30 per cent. That rate is now 22 per ernment is leaving no stone unturned to
units coming up in the near future and cent. For new manufacturing compa- make India a better place to do business,
economy dependent upon other sec- nies, the tax rate was 25 per cent. That has improve opportunities for all sections of
tors for a revival. The merger of banks is been brought down to 15. society and increase prosperity to make
meant to create lending institutions of For new manufacturing companies, India a $5 Trillion economy, he said.
global size. There is 10,000 crore to bail the effective rate with surcharges was Commerce and industry minister
out the housing sector. The 50,000 crore 29.1 per cent. Now, the basic rate is 15 per Piyush Goyal said the announcement of
for the remission of duties for exporters cent, and effectively a company will pay the corporate tax rate cut for companies
can take off only if there is a demand for only around 17 per cent. The MAT rate by almost 10 percentage points to 25.17
goods abroad. has been reduced from 18.5 per cent to per cent will give necessary fillip to the
The former RBI Governor, Rajan 15 per cent to stabilise the flow of funds economy. The Reserve Bank Governor
comments, “You can hear businesses all into capital markets. It is also clear now Shaktikanta Das said the reduction in
around worrying and complaining out that the enhanced surcharge levied in corporate tax is a bold measure, which
loud that they need some kind of stimu- the Budget shall not apply on capital will be highly positive for the economy.
lus and as such a fresh set of reforms” are Industry, stock market and experts
now needed to boost the economy and cheered slashing of corporate tax rate
growth rate. There is a need for a fresh The Indian economy, and other announcements by Finance
set of reforms and a comprehensive which has largely Minister Nirmala Sitharaman saying the
reform agenda for the economy.” “What big bang reforms will push economic
we really need is an understanding of been subdued in the growth and investments.
how we are going to propel this country past few quarters and Earlier, the finance minister had an-
by the two or three percentage points nounced on September 14 measures to
greater growth that it needs and that signs of a slowdown boost export and realty sector including
needs fixing the immediate problems have cropped up, is annual mega shopping festivals, remis-
such as in the power the sector, such as sion of duties or taxes on export prod-
in the non-bank financial sector and it likely to face several ucts. Prior to that on August 30 she had
is very important that those be tackled more risks in the near announced banking reforms-the merg-
immediately,” Rajan said we need a new ers of public sector banks from 27 to 12.
set of reforms to give boost to the private term, according to the However, principal opposition Con-
sector. “We need a new set of reforms to gress is not amused. In a statement, the
propel the private sector to invest”. country’s apex bank Congress party said on October 7, 2019
However, on the ongoing global eco- that the piecemeal approach continues
nomic slowdown, Rajan said that in gains arising in sale of equity shares in a but the government does not have a
comparison to the 2008 financial crisis, company. comprehensive solution to put the eco-
the banks are better levered across the Similarly, for new companies incor- nomic mess in order. The biggest thing
globe. Contrary to what most people say porated after October 1, 2019, and com- happening in the world right now is a
that history repeats itself, Rajan says that mencing production by March 31, 2023, trade war and the biggest trade war is
history never repeats. the income tax rate will be 15 per cent. being fought between the US and Chi-
The fact is that growth momentum The effective tax rate for these companies na. This was our big opportunity to take
has been slipping for the last three-to- will be 17.01 per cent. Such firms will also away a chunk of that market but guess
four quarters. Not only did GDP growth not be required to pay any MAT. Other what; we have not been able to take away
fall to a five year low of 5.8% in the fourth companies can opt for this concessional a chunk from the market. That chunk has
quarter of the financial year 2019. tax regime after the expiry of their exist- been taken away by Philippines — even
Steps to stimulate the economy with- ing tax holidays or the exemption period. by Bangladesh. 1.72 lakh crore has been
out compromising on the medium-term Prime Minister Narendra Modi hailed written off by Indian public sector banks.
objective of fiscal consolidation and in- his government’s decision to slash corpo- It would be interesting to watch how the
flation targeting ought to be seen as a rate tax rates. “The step to cut corporate baby steps by Finance Minister boost the
courageous and commendable move. tax is historic. It will give a great a stimu- economy or will these be adequate for
Finance Minister, Nirmala Sitharaman lus to Make in India, attract private in- the country?
while addressing a press conference had vestment from across the globe, improve
announced that corporate tax rates had the competitiveness of our private sector, letters@tehelka.com

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