India delivers surprise ‘hisroric’ corporate tax cuts to boost economy

Indian Prime Minister Narendra Modi addresses an election rally in Amreli, near Ahmedabad. More than 157 million of the country's 900 million voters are eligible to cast ballots on the second of seven days of voting in the world's biggest election. Photo: AFP. Sketched by the Pan Pacific Agency.

NEW DELHI, Sep 20, 2019, India Today, BBC. Prime Minister Narendra Modi has termed the step to corporate tax historic and said the move will give a great stimulus to Make in India, reported the India Today.

“The step to cut corporate tax is historic. It will give a great stimulus to Make In India, attract private investment from across the globe, improve the competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians,” PM Modi said in a series of tweets on Friday.

The Prime Minister added that measures taken in the last few weeks demonstrate that the government will leave no stone unturned to improve opportunities for society.

“The announcements in the last few weeks clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business,” PM Modi tweeted.

PM Modi also hoped that the latest steps will attract private investment from across the globe; increase prosperity to make India USD 5 trillion economy.

Battling a six-year low economic growth and a 45-year high unemployment rate, the government on Friday slashed corporate tax rates for companies by almost 10 per cent to 25.17 per cent to bring them at par with Asian rivals such as China and South Korea, as it looked to boost demand and investments.

Finance Minister Nirmala Sitharaman said the base corporate tax rate would be lowered to 22% from 30%, reported the BBC.

The surprise move triggered a stock market rally, with the Sensex index jumping 4.5%.

The tax cuts are the latest measures to boost spending and shore up investment in India.

Under the slate of reforms announced on Friday, India will lower its corporate tax rate to 22% from 30% for companies that don’t seek exemptions.

Firms that do receive incentives or exemptions will see their tax rate cut to 25% from 35%.

In addition, some new manufacturing firms will see their corporate tax rate lowered to 15% from 25%.

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