The current turmoil for the Indian economy where it is facing a substantial slowdown, took a sigh of relief when the Indian Finance Minister, Nirmala Sitharaman made a declaration regarding the reduction of the corporate tax rate. The reformation was announced on Friday, 20 September 2019 under which the basic corporate tax rate, which earlier was 30% smashed down to 22% which brought a stream of happiness all over the nation. Not just confined to this, another slot covering the new manufacturing firms will grab the privilege of mere 15% of the tax as compared to the earlier recorded for 25%. The decline is no less than a served barbeque to these new manufacturing companies who are supposed to benefit the most out of it. The tax rates will be levied with effect from the current fiscal year that began on 1st of April 2019. The country is facing a challenge where its past economic status has set the benchmarks for a few of the indicators like GDP and automotive sales which on being compared with the status quo may face an uninvited recession. In this respect, the country’s Finance Minister’s statement has created high hopes for the Indian economy which has by now, already started impacting the Sensex escalating figures.
This move is in particular, seen as a perquisite for the budding startups and the entrepreneurs who otherwise primarily find it way more than challenging to recover the paybacks invested as initial capital; paying the corporate tax, in that scenario, was indirectly haunting for them. The reduction will definitely encourage the new manufacturing companies and will contribute to the ‘Make in India’ initiative ultimately strengthening the roots of economy. Another positive turbulence witnessed on the same day as mentioned above was the surge in the Sensex figures. The Sensex zoomed past 1,900 points stating the figure at 38,014.62, which in itself was a surge of approximately 5%. The Indian giants including the RIL, Tata Steel, L&T, ICICI Bank, HDFC Bank among many others were the major gainers form this surge. The value of India Rupee (INR) was recorded at 70.68 paise against the US dollar which strengthened by 66 paise. Moreover, the reduction in tax was primarily done to uplift the level of investments in the country ultimately paving way for further economic growth.
Will it really turn the economy upside-down?
Well, the move created a high buzz in the country especially on the investment part, however, the real question that arises is- will it actually change the bigger picture of the Indian economy? Without a doubt, the prominent parties including the corporates, manufacturers, entrepreneurs; specifically the budding businesses, and lately, the investors will extract the most out of it. However, the whispers of recession in the country can still be not ignored. As far as the Sensex values are concerned, they are subject to fluctuations (as their very name indicates- Sensitive Index!) relying on of whom can blur the roadmap of the country’s economic growth. However, tax exemption, in the long run, have still made the countries finger crossed!
