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    FM hints 25% corporate tax may be extended to all companies

    Synopsis

    Nirmala Sitharaman says commitment made in debut budget of the first Modi govt has to be honoured.

    PTI
    She said the government has undertaken steps to improve the condition of nonbanking finance companies to address the liquidity stress that has squeezed the sector.
    NEW DELHI: Finance minister Nirmala Sitharaman signalled that the government may extend the lower corporate tax rate of 25% to all companies, giving India Inc something to cheer about. Her July 5 budget had lowered the rate for most companies but excluded the biggest.

    “We brought it down in order that now 99.3% of all industries are covered by the 25% rate,” Sitharaman said in her reply to the discussion on the appropriation and finance bills in the Rajya Sabha. “Therefore, hardly any are left behind… We shall cover them sooner.” She said this was a commitment that had been given in the debut budget of the first Narendra Modi government in 2014 and it had to be honoured.

    “The promise that corporate tax rate would be brought down has been kept,” she said.
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    The bills were endorsed by voice vote and returned on Tuesday, marking the passage of the first budget by the second Narendra Modi-helmed administration in Parliament.

    Sitharaman said the government’s tax proposals are aimed at redistribution of wealth to bring about more equitable development. In her budget speech, she had proposed to cut corporate tax rate to 25% from 30% for companies with annual turnover of up to Rs 400 crore.

    ‘Fuel Levies won’t Increase Burden’
    “So far as corporate tax is concerned, we continue with phased reduction in rates,” she had said. “Currently, the lower rate of 25% is only applicable to companies having annual turnover up to Rs 250 crore. I propose to widen this to include all companies having annual turnover up to Rs 400 crore.” That left 0.7% of companies excluded from the lower rate, she had said.

    This government has come back to power with a larger mandate and is aiming to put in place a New India where there is greater transparency, less government, more governance and redistribution of resources with greater equity in mind, she said.

    She said the government has undertaken steps to improve the condition of nonbanking finance companies to address the liquidity stress that has squeezed the sector. Sitharaman justified raising levies on petrol and diesel, saying that inflation was at rock bottom and the move would not add any significant burden in this respect.

    On the levy of 2% tax deducted at source (TDS) if aggregate cash withdrawal exceeds Rs 1 crore, the finance minister said this will not be over and above the tax liability of the individual or the entity and can be set off when returns are filed.

    The total TDS paid on cash withdrawal beyond Rs 1crore will be adjusted against the total tax dues of the taxpayer and would not be regarded as income in the hands of the taxpayer. This provision will come into effect from September 1. She highlighted the concessions offered to startups, electrical vehicles, affordable housing and financial service centres.

    The finance minister also highlighted that the Modi government backed increase in devolution to states from 32% to 42%, which has provided a higher level of funds for them. In her reply to the debate in the Lok Sabha last week, Sitharaman had stuck to her budget proposals and declined to relent on demand by foreign portfolio investors (FPIs) structured as trusts that they be exempted from a higher surcharge.
    (Catch all the Business News, Breaking News Events and Latest News Updates on The Economic Times.)

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    29 Comments on this Story

    Jayant Gujar376 days ago
    mr modi team and fm sitaraman has punished stock investor for voting BJP by wiping out mr thousand crores and help FPI take their money away cheers to all voters who voted for ache din by beconing kafalak
    Iyerravishankar Iyer376 days ago
    Most respected Nirmala Madam,
    Your budget speech was extremely good. Your appreciation about the Government was commendable. You will get promotion in the 3rd term of Modiji.
    Can you kindly see the greatest of investors. You and Arun Jaitly ha firmly determined very strongly to punish severely the equity investors. Respected Madam, LIC & PF FUND HAD INVESTED IN EQUITIES. IMAGEINE HOW MUCH RETURN LIC COULD GET FROM THE MARKET.
    IT IS NOT RIGHT TIME TO PUNISH FOREIGN INST. INVESTORS. DOMESTIC INVESTORS COULD NOT REACH THE LEVEL AS FII.
    IF YOU STICK TO YOUR POLICY, SOME GOOD STOCKS WILL REACH "0". THENKS FOR YOUR 5TH JULY BUDGET.
    INVESTORS CANNOT DO ANY THING NOW. BECAUSE YOU HAVE GREAT POWER.
    LET US WAIT AND WATCH WHAT WILL HAPPEN.
    Srinath Sai376 days ago
    To what use is a corporate tax cut, if the ''pure'' old Indian companies,
    a handful of them that are remaining such as BPL, HMT, Videocon, etc., aren''t able to do ''business''(find customers to sell) and are on the brink of collapse, but still proudly remain as Indian even today despite facing all the hardships of a lack of patronage from Indian customers and the Indian banks alike? These ''pure'' Indian companies which are just a handful that remain today and which also are on the verge of extinction, losing out to their ''pseudo-Indian counterparts/converts'' in Flipkart, PayTM, OYO or Ola or the more stronger ''foreign'' brands of Xiaomi, Apple, Google, WhatsApp, Facebook, Bosch, Amazon, etc.,owing to their lack of seamless access to credit across borders orthe undying patronage of the Indian consumers domiciled here, which the latter two groups enjoy completely. So, there''s no level playing field for all the players in our Indian marketplace, as the odds are stacked up much more for the pure homegrown Indian companies to survive and don''t drown into oblivion.
    The Economic Times