New Delhi: India’s corporate tax now has become very competitive as compared to other emerging markets (EMs) and the country is expected to attract higher foreign direct investments (FDI), said Reserve Bank of India Governor Shaktikanta Das. He also lauded the Narendra Modi-led government’s move to slash the Corporate tax rates and termed the move a positive and bold step.
“So far as international investors, FDI are concerned, I think India stands definitely in a very competitive position, and should be able to attract higher investments”, ANI quoted the RBI governor as saying.
Talking about the domestic investors, he asserted,”With lower tax, domestic companies now have more cash left with themselves. They’ll be able to undertake more capital expenditure, some of them can deleverage liabilities which will add strength to their balance sheets.”
Earlier on September 20, the government had slashed the corporate tax rates to 22 per cent for domestic companies and 15 per cent for new domestic manufacturing companies and other fiscal reliefs in order to promote growth and investment.
The effective tax rate for these companies would now be 25.17 per cent, inclusive of surcharge and cess. Also, such companies shall not be required to pay Minimum Alternate Tax (MAT).
The total revenue foregone for the reduction in corporate tax rate and other relief is estimated at Rs 1,45,000 crore. This was the biggest announcement so far by the Modi 2.0 government to fight the slowdown, which dragged down the GDP growth to a six-year low of 5 per cent in the April-June quarter of the current fiscal.