Finance Minister Nirmala Sitharaman on Friday announced the government's decision to lower the corporate tax rates for companies in a bid to boost demand and investments. Ms Sitharaman said that the effective tax rate will be reduced to 25.2 per cent including all surcharges, and will be applicable on companies that aren't availing any incentives. The move will bring the rates at par with Asian rivals such as China and South Korea, the Finance Minister said. The government will bear a massive Rs 1.45 lakh crore per year to support the move, and the new tax structure will take effect from April 1, 2019, she added.
Here's what corporates said about the government's big move on corporate taxes:
RC Bhargava, chairman, Maruti Suzuki:
"Excellent steps announced By FM today, expect them to stimulate the economy and to attract investments into the manufacturing sector going forward from now. This now gives elbow room to companies to reduce prices and increase demand for their products."
Rajnish Kumar, chairman, State Bank of India:
"The large reduction in corporate taxes across the spectrum of all companies is perhaps the boldest reform in the last 28 years! Such a rate cut will boost corporate bottom-line, facilitate a reduction in product prices. Additionally, the move to incentivise setting up new manufacturing units in India comes at the most opportune time for foreign companies who could be actively looking for opportunities to invest globally!"
"This move could also materially lead to India effectively integrating with the global supply chain and a boost to Make in India campaign."
Niranjan Hiranandani, senior vice president, industry body Assocham:
"India Inc looks forward to a roller coaster festive season tax bonanza to ride the tide of positive sentiments. This positive sentiment will go long way in resurrecting dying economy."
Nirmal Jain, chairman, IIFL Group:
"Finance Minister Nirmala Sitharaman's Rs 1.45 lakh crore stimulus to reboot India is a bold move to unleash the animal spirit! This can certainly turn the tide for the economy & markets!"
"Also, it's a move towards simpler low tax regime with no or minimal incentives exemptions (which are misused more than used)."
Aditya Ghosh, CEO, OYO India and South Asia:
"This is a bold step to provide a fillip to the Indian economy. Just ahead of the festive season, the honourable Finance Minister by reducing the corporate tax rates, has given a triple booster dose to the economy as this will increase the retained earnings of the companies which will result in investible surplus for the future, shift India at par with its regional peers thereby removing one of the issues related to manufacturing and exports and maintain macroeconomic prudence by continuing to stimulate the investment cycle. We congratulate the Finance Minister and the Govt. of India for this progressive move."
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