India Stocks Poised For Biggest Jump in a Decade on Tax Cuts

Government Committed To Supporting Small Businesses Nirmala Sitharaman

The Finance Minister further said, "to boost "Make in India", another insertion inserted to Income Tax Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing will have an option to pay the income tax at the rate of 15%".

New companies formed from October 1 will attract 15% tax and an effective rate of 17.01%, Sitharaman said.

Ashutosh Datar, an independent economist, told AFP the tax cuts were "long overdue as India has one of the highest tax rates in the world".

Reserve Bank of India Governor Shaktikanta Das said the moves augur "extremely well" for the economy. The effective rate, including all additional levies, will be 25.2% and applicable on companies that aren't availing any incentives or exemptions.

"It is a real game-changer and the government should revisit personal taxation as well", TVS Motor Chairman Venu Srinivasan said soon after the Finance Minister Nirmala Sitaraman made the blockbuster announcement in Goa.

This benefit is available to companies that commence production on or before March 31, 2023. She also announced tax sops for new manufacturers. Among the large players, Apple is planning to invest in a new plant to make Apple products like iPhones. "It shows the government is well seized of the economic challenges facing all of us".

The most important thing is that corporates must go out and spend.

While concerns on the fiscal deficit do remain, the other concern is whether the savings by corporates through a corporate tax cut would finally translate into investments by these companies.

The step will promote growth and investment, Sitharaman said, speaking from the western Indian city of Panaji. The measure is thus a boost for start ups as well.

"It will also help boost growth over the next two-three quarters and the steps will boost corporate profitability, dividend payment ability", he added.

India said on Friday it would slash corporate taxes to among the lowest in Asia as part of its drive to kickstart the stuttering economy, sending the country's stock market surging as analysts predicted a renewal of interest in the region. "While the cuts won't increase demand from customers, it's possible to look at pricing policies", he said.

The Finance Minister also said that import of specified defence goods which are not being manufactured indigenously have been exempted from GST/IGST till 2024.

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