Finance Minister Nirmala Sitharaman announced a slew of measures on Friday to revive sagging investment in Asia’s third-largest economy, including a cut in corporate taxes.
Sitharaman told a news conference that the effective corporate tax rate will be lowered to 25.75 percent from 30 percent.
A. Prasanna, Head of Research, ICICI Securities Primary dealership Pvt Ltd
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“This is a long overdue and hugely positive move by the finance minister. Nearly 50 per cent of the companies were paying effective tax rate of below 30 per cent under current rules. The new rates simplify the tax architecture and will give a fillip to investments and jobs. This is the first concrete step towards realising Make in India.”
“The fiscal impact will be large, but right now the need for economic recovery should take priority. I expect the RBI to accommodate this fiscal expansion via additional open market operations to keep interest rates in check.”
Mahendra Kumar Jajoo, Head of Fixed Income, Mirae Asset Global investments
“On one side is the reality that 1.45 trillion rupees is sacrificed. On the other side is the hope that it will be recovered through economic recovery.”
“This kind of a revenue recovery will be pretty challenging. So right now, it is negative for bonds and positive for equity markets.”
Source: Business Standard
