The series of tax reliefs Union Finance Minister Nirmala Sitharaman announced in New Delhi on Friday would revive the economy, boost investment, spur growth and create jobs, said India Inc honchos across the sectors.
“The corporate tax relief measures are a concrete step to stabilise the economy, boost investment, spur growth and create jobs in key sectors,” Tech Mahindra Chief Executive C.P. Gurnani said in a statement here.
Hailing the lowering of corporate tax, Gurnani said the timely move would give a fillip to the government’s ‘Make in India’ initiatives and attract overseas and domestic investments for creating the much needed jobs and growth momentum.
“The government has taken a giant leap in tax reforms. It’s a huge boost to corporates and will enhance India’s position as a competitive destination for fresh foreign investments,” Wipro Chief Financial Officer Jatin Dalal said in a statement here.
Noting that the announcements would give a fresh impetus to the government’s ‘Make in India’ initiative with reduced tax rates, Dalal said the clarification on grand-fathering of buyback tax on inflight buyback programmes as of July 5 was a comforting move.
“The withdrawal of tax on buy back of shares will go a long way in restoring confidence in the market and nudge companies to make fresh investments,” said Dalal.
Besides lowering the corporate tax on domestic firms to 22 per cent to firms not availing exemptions and incentives, Sitharaman has also abolished the payment of Minimum Alternate Tax (MAT).
The effective rate, however, will be 25.17 per cent with cess and surcharge.
The corporate tax will be 15 per cent for new firms investing in manufacturing and commencing production before March 31, 2023. They will also be exempt from the MAT.
The MAT has also been reduced to 15 per cent, from 18.5 per cent, to companies availing concessions and tax incentives.
The Finance Minister also announced that companies which announced share buy-back plans before the new tax on them was introduced in the Union Budget for fiscal 2019-20 on July 5, would not have to pay tax.
“The series of measures the government has taken since a week shows its commitment to bolster the economy and spearhead growth by turning the sentiment positive, keeping in view the target of achieving a $5-trillion economy by 2024,” said Barcho India Managing Director Rajiv Bhalla.
Terming the tax sops bold for ease of doing business, Jaina group Managing Director Pradeep Jain said the taxation measures would incentivise companies focused on ‘Make in India’ and the country’s economic betterment.
“The tax reliefs will help us to use funds to make more in India and benefit the economy as a whole,” Jain said in a statement here.