03 December, 2019
Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
News: The government’s decision to cut corporate tax rates for domestic companies, including new manufacturers, was taken in the context of companies exiting China amid the trade war between Washington and Beijing, finance minister Nirmala Sitharaman told Parliament on Monday.
Prelims and Mains focus: about the recent economic slowdown, Corporate tax cuts and other measures taken by the government
Remarks made by the FM
Sitharaman, who moved the Taxation Laws (Amendment) Bill, 2019, in the Lok Sabha for passage, said that several southeast Asian nations have lowered their corporate tax rates, while some were contemplating rate cuts. Singapore has a 17% tax rate, she added. The Lok Sabha passed the bill on Monday.
“Keeping in mind the trade war between the US and the People’s Republic of China and indications that many multinational companies wanted to get out of China, although the budget FY20 had been passed shortly before this, we thought of reducing the corporate tax rate. The ordinance route was taken because the House was not in session,” the minister said while placing the bill for the consideration of the House.
About the Bill
The ordinance promulgated in September offered a lower 22% corporate tax rate for companies that do not avail tax incentives and 15% for new manufacturers starting production before March 2023.
The move was aimed at reversing the economic slowdown. The government had also lowered the rate of minimum alternate tax (MAT) from 18.5% to 15% for businesses that continue to avail exemptions. The Bill clarified that the lower MAT rate of 15% will be applicable from 1 April, 2019, a move that tax experts welcomed.
The bill placed before the Lok Sabha on Monday also contains certain proposals that were not part of the ordinance. It clarifies that new mining companies, software producers, gas bottling plants, and book printers are not eligible for the 15% corporate tax rate announced in September. It allows companies indulging in other business activities along with manufacturing operations to claim the concessional tax rate of 15%, though the income arising on account of non-manufacturing activities shall be taxable at the rate of 22% on a gross basis without deduction of any expenditure, said Girish Vanvari, founder of advisory firm Transaction Square.
Concerns raised by the Opposition
During the discussion, opposition members accused the government of not being able to manage the economy well.
K. Subbarayan, a Communist Party of India member from Tamil Nadu, alleged the bill was pro-business. The MP highlighted the initial estimate of the ?1.45 trillion revenue that will be forgone because of the reduction in tax rates.
India’s economic downturn deepened in the second quarter with growth losing steam to 4.5%, the lowest since March 2013, as manufacturing output contracted, official data showed last month. The economy had expanded at 5% in the first quarter. The slowdown has proved to be a weak point for Prime Minister Narendra Modi’s government, which has set itself the goal of doubling the size of the economy to $5 trillion over the next five years.
Operation 'Megha Chakra' on Child Sexual Abuse The "Megh Chakra" operation is being carried out in response to inputs from Interpol's Singapore special unit based on the information obtained from the New Zealand authorities. The Central Bureau of Investigation (CBI) is waging a nationwide campaign against the dissemina
World Tourism Day and India’s status Every year on September 27, people all over the world celebrate World Tourism Day. This year, it will take place in Bali, Indonesia. “Rethinking Tourism” is the theme for 2022. ??????? What are the Main Ideas? Since 1980, September 27 has been observed as World Tourism Day
Jaldoot App & Groundwater Status in India The "JALDOOT App and JALDOOT App e-brochure" was recently released by the Ministry of Rural Development to better measure groundwater levels. ??????? About JALDOOT app The Panchayati Raj and the Ministry of Rural Development collaborated to create the JALDOOT app.
Group of Four (G4) on UNSC Reform Under the auspices of The Group of Four (G4), the External Affairs Minister of India met with his counterparts from Brazil, Germany, and Japan. Details about the news G4 discussed concerns pertaining to the UN Security Council reform during a meeting that took place alongside the 77th session of the
Draft Indian Telecommunication Bill 2022 To control Internet-based OTT (Over-The-Top) telecom services, the Department of Telecommunications (DoT) recently announced the draught Indian Telecommunications 2022 Bill. ?????????????? What are the Draft Bill's Main Points? The Indian Telegraph Act, 1885, Indian Wireless Telegraph
Copyright© Aspire IAS Academy. All rights reserved. Powered by CLT Technologies & Edu-Publishers Private Limited.