The drastic reduction in corporate taxes is a huge game-changer for the economy and is truly a decisive announcement for awakening animal spirits of investors. It will catalyse investments, particularly in manufacturing, infuse huge confidence among investors, and set a new springboard for growth. We congratulate Hon’ble Prime Minister Shri Modi and Hon’ble Finance Minister Smt Nirmala Sitharaman on this historic decision that is based on a consultative and proactive approach, stated a press release from Confederation of Indian Industry (CII), welcoming the tax measures announced today.
“Hon’ble Finance Minister’s mega Corporate Tax stimulus is a major move to boost investors sentiments, encourage manufacturing and awaken animal spirits in the economy. Cut in corporate tax from 30% to 22% without exemptions has been a long standing demand of industry and is an unprecedented and bold move by the Government,” said Mr Vikram Kirloskar, President, CII.
CII stressed that the collaborative approach of the Government in taking the landmark decisions is evident in the announcements. Key CII submissions to the Government are included in the measures, including lowering corporate tax rates without exemptions and reducing MAT. CII had also suggested that mandatory CSR provisions should be extended to social business enterprises.
“CII is thankful to the Hon’ble Finance Minister for being so receptive and open to suggestions from industry. This consultative approach has further bolstered positive spirits in industry that the government is on a fearless track to ensure that India becomes as competitive on tax rates with the rest of the world. This also indicates that the government is adopting a tax stimulus route rather than using increasing government spending route to help the recovery process of the economy. Coming just ahead of the festive season, there could not have been a better news as the entire country gets ready to celebrate.”
The FM has given industry what it asked for by lowering corporate taxes for new companies to 22% without exemptions and incentives. The major cut in tax rates places India in a formidable position to capture new growth opportunities and create massive employment. Industry warmly welcomes these decisions and thanks Hon’ble Prime Minister for this commendable strategy, added the CII statement.
The decision to bring down tax rates for new manufacturing companies to 15% makes Indian tax rates competitive with comparator nations and would greatly encourage manufacturing at a time when global supply chains are shifting, stressed CII. It is in line with CII’s recommendations since long to cut corporate tax rates to align India’s tax rates with other economies to make India a globally attractive investment destination.
Another major step announced by the FM today was extending 2% CSR spending to R&D in collaboration with public funded universities and leading institutions. This will benefit R&D spending by industry which currently stands at just 0.3% of GDP. Further, it will generate industry-academia collaborations for commercialisation of research in science, technology, engineering and medicine related to sustainable development goals.
The step to reduce MAT to 15% is a notable relief for industry as it had been raised over the years. Alleviating enhanced surcharge on capital gains including for FPIs and grandfathering companies with existing incentives is also a very positive initiative, said CII.
CII stated that today’s announcements counteract the economic slowdown and reiterate that the Government can take tough and bold decisions to ensure revival of market forces.
Overall, the landmark decisions announced by Hon’ble FM today promise to be a new milestone for India’s economic growth process.
20 September 2019