New Delhi: Industry, stock market and experts cheered slashing of corporate tax rate and other announcements by Finance Minister Nirmala Sitharaman saying the big bang reforms will push economic growth and investments.
"Reducing corporate tax rate to 25 per cent is big bang reform. Allows Indian companies to compete with lower tax jurisdictions like the US. It signals that our government is committed to economic growth and supports legitimate tax abiding companies. A bold, progressive step forward, Kotak Mahindra Bank CEO Uday Kotak said in a tweet.
Biocon CMD Kiran Mazumdar Shaw also applauded Finance Minister Nirmala Sitharaman.
"Corporate tax rate cut from 30 per cent to 25.2 per cent to spur growth- this is a great move which will firmly revive growth and investment. My hats off to FM @nsitharaman for this bold but most needed move," she tweeted.
Ashok Maheshwary & Associates LLP Partner Amit Maheshwari said "lately we have been loosing a lot of investments to other Asian countries who had been consistently reducing their corporate tax rate. This will help attract significant FDI and manufacturing to India. Abolition of DDT and going back to classical way of taxing dividends would be an icing on the cake".
In a major fiscal booster, the government on Friday slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.
Making the announcement, Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
CII President Vikram Kirloskar said "cut in corporate tax from 30 per cent to 22 per cent without exemptions has been a long standing demand of industry and is an unprecedented and bold move by the Government".
Post, the announcements by Sitharaman, the 30-share benchmark Sensex jumped over five per cent or 1,955.46 points to 38048.93, which is also the biggest intra-day jump in a decade.
According to Frank D'Souza Partner and Leader Corporate and International Tax, PwC India, "the reduction in the corporate tax rate is a welcome move and makes India attractive for new investments. Also, the changes to CSR contributions and the relief on buy-back tax, will address past concerns and also help in channelling funds towards R&D initiatives".
Sitharaman said the super-rich tax will not to apply on capital gains arising from sale of any security including derivatives in hands of foreign portfolio investors (FPIs).
In another relief, the minister said listed companies which have announced buyback of shares prior to July 5, will not be charged with super rich tax.
The companies have now also been permitted to use their 2 per cent CSR spend on incubation, IITs, NITs, and national laboratories.
Sitharaman expressed confidence that the tax concessions will bring investments in Make in India, boost employment and economic activity, leading to more revenue.
India's gross domestic product (GDP) growth slowed for the fifth consecutive quarter in April-June 2019 to 5 per cent, the lowest in six years.