Finance Minister Nirmala Sitharaman Announces Corporate Tax Reforms, Here's What People From The Industry Have To Say

In a recent announcement by Nirmala Sitharaman, where the centre reduced the corporate tax on domestic companies in order to revive the economy. Following are the highlights from the announcement: 

1. Reduction in the corporate tax rate to 25.17% (without any exemptions/incentives) for any domestic company.  This should help large corporates invest in augmenting the businesses further.
2. Companies incorporated on or after October 1, 2019, and making fresh investment in manufacturing can opt for a tax rate of 17.01% (without any exemptions/incentives).
3. Other companies intending to avail exemptions/incentives too can avail tax rate of 22% after the exemptions/incentives expire. Rate of Minimum Alternate Tax (MAT) has been reduced for them to 15% and the other two categories have been exempted from MAT.

Also Read: World Economic Forum Emphasises On Mumbai Being World's Most Traffic Congested City

According to the chairman of Piramal Group, Ajay Piramal,

The announcement made by the Finance Minister today is commendable. With this, the Government has signalled that it is listening to the industry and is willing to embrace it as a partner for the progress of the Country. We are certain that this Big Bang reform will kickstart the economy. Surplus funds available to companies will be invested in capex and talent. The NBFC sector will save between Rs. 250 - 300 crore that can potentially be redeployed as loans. In a climate of the global slowdown, this reform will make India an attractive destination for FIIs and long term investors. The announcement has brought parity to India’s corporate tax rate compared to that of advanced markets thus making it very competitive.

According to Kumarmangalam Vijay from J Sagar Associates, 

"Government’s move to announce the sweeping tax changes is unprecedented and the fact that these are being implemented through an ordinance in mid of the year gives confidence that it is willing to do all it can to spur the economic activity. Capital gains earned by investors domestic investors as well as FII’s in equity in capital market Investors too have been exempted from high surcharge rates enhanced in July this year. Finance Minister has also exempted buybacks announced by listed entities before July 5^th 2019 from buyback tax. Overall, very significant steps that augur well for helping the economy outgrow the current slump and should boost the investor confidence.”

Also Read: Jio And Microsoft Announce Alliance To Accelerate Digital Transformation In India

According to Harsh Vardhan form Jivi Mobiles, 

"The government is extensively working towards simplifying the turf for the industrialists in the country. The fourth consecutive relief measure of the government will have a direct implication on the economy ahead of the festive season. The benefit of the rate cut will be passed to the consumers and hence we can expect that the demand will get a significant boost. The mobile phone manufacturers which are continuously increasing in India will leverage this tax implication and this will improve the production capabilities which will play a major role in the economic development of the country."