Corporate tax cut to boost investments: FM
NEW DELHI: Asserting that corporate tax reduction is aimed at attracting fresh investment and generating jobs, Finance Minister Nirmala Sitharaman said “green shoots” are already visible with several foreign as well as domestic firms showing interest to invest.
Amid concerns over slowing growth, Sitharaman assured that the Centre was “pro-active” in addressing challenges faced by the economy and made it clear that tax rate cut was not aimed to benefit certain companies but the entire industry. She said “people are approaching” the government for fresh investment which will help in generating more jobs and make India a manufacturing hub. Replying to a debate on Taxation Laws (Amendment Bill) in the Lok Sabha, she said the decision to reduce corporate tax will have an impact of about Rs 1.45 lakh cr on revenue collection, but it will help in bringing more funds within a year’s time.
After the debate, the House passed the Bill, replacing an Ordinance by voice vote. She said there was no decrease in direct tax collection and the gross mop-up rose 5 per cent till November this fiscal. She also stressed that maximum direct tax collection comes in the final quarter of the financial year. In Nov, GST collections crossed Rs 1 lakh cr, the third highest-ever monthly mop-up since the new indirect tax regime came into force.
On the impact of corporate tax cut, the minister said, “It is a decision (corporate tax reduction) which has resulted in revenue foregone. About Rs 1.45 lakh crore could be foregone.” In the biggest reduction in 28 years, the government in September slashed corporate tax rates by up to 10 percentage points as it looked to pull the economy out of a sixyear low growth with a Rs 1.45 lakh crore tax break. Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.
The companies opting for lower tax rates, however, will not be entitled to claim any rebate or deductions.