×

UPSC Courses

DNA banner

DAILY NEWS ANALYSIS

  • 21 September, 2019

  • 3 Min Read

A Deep Cut

GS-III: A Deep Cut.

News

Tax cuts have enthused Corporate India, but there is a fiscal problem to deal with. Finance Minster announced of deep cut of corporate taxes and roll back some market unfriendly proposals in the budget she presented in July.

Corporate Tax Cut:

Finance Minister Sitharaman’s announcement to cut corporate tax rates was a welcome surprise for the Indian economy which has been struggling with growth deceleration.

The government has cut the corporate tax rate for domestic companies to 22 per cent (inclusive of all cesses and surcharges) for domestic companies from the existing 30 per cent.

The new tax rate will be applicable from the current fiscal which began on April 1.

The move is a lift for the Modi government which was facing increasing pressure to relight the once-stellar economy after five consecutive quarters of slowing growth saw India this year loses its status as the fastest-expanding major economy to China.

Finance Minister announcement:

  • A new provision inserted in the income tax act with effect from the fiscal year 2019-20, that allows any domestic company to pay income tax at the rate of 22% subject to the condition they will not avail of any incentive or exemptions
  • Manufacturing companies set up after October 1 to get the option to pay 15% tax. The effective tax rate for new manufacturing firms is 17.01% inclusive of surcharge & tax.
  • Listed companies that have announced buyback before July 5, 2019, tax on buyback of shares will not be charged
  • A higher surcharge will also not apply on capital gains on sale of security including derivatives held by FPIs
  • An enhanced surcharge will not apply to capital gains arising on equity sale or equity-oriented funds liable to STT stabilise the flow of funds into capital markets
  • To provide relief to companies availing of concessions and benefits, a MAT relief by reducing it from 18% to 15%
  • CSR 2% spending to include government, PSU incubators and public-funded education entities, IITs.

Benefits:

  • Essentially, a lower corporate tax is aimed at boosting investment by the private sector.
  • The continuing deceleration of the Indian economy was being blamed both on depressed consumption by private individuals and a decline in investment by private businesses.
  • The two other factors contributing to growth – government expenditure (where the fiscal deficit is under pressure) and exports (which have been stagnant), both have little space to boost growth.
  • The cut in corporate tax chooses to single out private investment.
  • This is a long-term measure that would make it more attractive for existing and new businesses to invest and increasing production will create employment

Source: THE HINDU


Pradhan Mantri Suryodaya Yojana

Recently, Prime Minister announced Pradhan Mantri Suryodaya Yojana under which 1 crore households will get rooftop solar power systems. India’s Status of Current Solar Capacity India currently stands at 4th place globally in solar power capacity. As per Ministry of New an

Foreign Contribution Regulation Act (FCRA)- NGO 

The Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organisations (NGOs) — Centre for Policy Research (CPR) and World Vision India (WVI) have been cancelled this month. What is FCRA? Key provisions of FCRA, 2010 Key aspects Description

Voice clone-AI

Voice clone fraud has been on the rise in India. AI voice cloning – It is the process of creating a synthetic replica of a person’s voice through machine learning and speech synthesis technology.It is called as voice deepfakesor audio deepfakes. Objective – To achieve a high level of na

Science communication- how to promote

Steps taken by India to promote Science Communication Publications and Information Directorate (PID) - An organisation under Council of Science and Industrial Research (CSIR) established in 1951 for publishing and disseminating scientific information in India. National science magazines- The PI

Universal Basic Income (UBI)- Analysis

Universal Basic Income (UBI) can strengthen welfare architecture and unlock the nation’s latent demographic potential. UBI - It is an income support mechanism typically intended to reach all or a very large portion of the population regardless of their earnings or employment status. Objective- To provide enough to co

Toppers

Search By Date

Newsletter Subscription
SMS Alerts

Important Links