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Corporate tax cut to make India manufacturing hub: FM

Dec '19
Pic: Shutterstock
Pic: Shutterstock
The corporate tax cut bonanza, which would result in revenue foregone of ₹1.45 lakh crore, would help India become a manufacturing hub by boosting fresh investments in the manufacturing sector, finance minister Nirmala Sitharaman said while moving the Taxation Laws (Amendment) Bill, 2019, for consideration and passage in parliament lower house.

The lower house yesterday passed the bill through voice vote and it will be taken up next in the upper house. It will replace the Ordinance promulgated on September 20.

During discussions in the house on the bill, Sitharaman said it was too early to elaborate on the impact of the move, but added that already there were investment green shoots with several foreign companies evincing interest in the new regime that provides for 15 per cent corporate tax rate, according to a news agency report.

“The whole objective of reducing corporate tax was to drive and attract manufacturing investments from all over the world. This had prompted us to introduce a special rate of 15 per cent for new investments from new companies that go into operation between October 2019 to 2023,” she said.

Rejecting suggestions regarding extending the concessional regime of 15 per cent corporate tax rate to existing manufacturing companies that want to undertake expansion, Sitharaman said the government does not want to complicate the system and the intention of our September 20 move is to invite fresh investments, she said.

The finance minister ruled out cuts in personal income tax along with the reduced corporate tax rate regime, stating that she would rather like to deal with it separately on its merit.

She also ruled out extending the concessional corporate tax regime to limited liability partnerships or partnership firms, saying their structure was different from a corporate vehicle and therefore do not merit the concessional tax regime.

Sitharaman said she will spend more time to understand if the economic slowdown is cyclical or structural.

Fibre2Fashion News Desk (DS)

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December 2019

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