FM introduces Bill to cut corporate tax

In a move to replace the Ordinance that slashed the corporate tax rate recently, finance minister Nirmala Sitharaman introduced the Taxation Laws (Amendment) Bill, 2019 in the Lok Sabha on Monday.

The Bill will, however, replace the Taxation Laws (Amendment) Ordinance, 2019, promulgated on September 20, 2019.

Besides, the International Financial Services Centres (IFSCs) Authority Bill, 2019, that provides for creation of a unified financial regulator for IFSCs was introduced at the same time as well.

On September 20, the finance minister had announced the lowering of the base corporate tax rate to 22 per cent from 30 per cent for companies that do not seek exemptions, and reduced the rate for some new manufacturing companies to 15 per cent from 25 per cent. Including surcharges and cesses (levies to raise funds for specific purposes), the effective corporate tax rate will drop by nearly 10 percentage points to 25.2 per cent.

The move came after the country faced criticism over unprecedented growth of gross domestic product or GDP that slowed for a fifth consecutive quarter in April-June to 5 per cent, the slowest pace in six years. Also, credit rating agencies have slashed India’s GDP growth forecast for 2019-20 pronounced slowdown due to long-lasting factors.

Besides, the country also underwent several financial pressure, such as mute domestic demand, weak global trade environment, uphill task of asset-quality growth at banks and liquidity pressure on non-banking financial companies (NBFCs) as well.

The healing measure of corporate tax cut was followed by other measures by the government to prop up GDP growth. These include efforts to reduce corruption and boost FDI and consolidation of PSU banks.

The finance minister also produced the International Financial Services Centres Authority Bill, 2019. The Bill provides for the establishment of the International Financial Services Centres Authority.