In an attempt to uplift the sinking economy, the Finance Minister Nirmala Sitharaman deployed a new course of action whereby the government has decided to give relief to certain sectors of the economy by slashing corporate taxes. It has been announced that all domestic companies who are not benefiting from any incentive or exemption (as are offered by the Government) shall now pay a corporate tax of 22 per cent down from 30 per cent. This shall be implemented by way of an ordinance.
Such companies shall be essentially paying a corporate tax of 25.17 per cent after add-ons like cess and surcharge. Prior to this rate cut, these companies were paying a tax of around 34.94 per cent. Therefore they have now heaved a sigh of relief. Besides this, any company incorporated on or post October 1, 2019 shall pay an income tax at the rate of 15 per cent which was earlier 25 percent however without any exemption or tax holiday.
Lowering the tax rate will most likely allow the Indian companies to be more economical and driven when compared to other companies hailing from Asian countries. The liquidity rate shall thus increase and they might choose to not move out of India.
This major tax bonanza led to a jump in Sensex and NIFTY who recorded highest gain within a day at 4 per cent which has happened almost after a decade.
Tags : #corporatetax #economicgrowth #NirmalaSitharaman