‘I have been working on it’, Nirmala Sitharaman’s retort to criticism

Andrew Cummings
September 20, 2019

Domestic stock markets registered sharp gains on Friday morning after Finance Minister Nirmala Sitharaman announced a cut in corporate tax rate for domestic companies and new manufacturing firms.

Finance Minister Nirmala Sitharaman on September 19 defended her handling of the economy saying she has been working on measures to revive the growth from a six-year low.

Companies incorporated from the next month and starting production before March 31, 2023 would get reduction in corporation tax rate from 25 per cent to 15 per cent.

"As Finance Minister - you might've observed - I've been working on and regularly speaking about measures weaeve been taking on matters of the economy", reacted Sitharaman.

Sitharaman announced that the corporation tax rate has been cut to 22 per cent from 30 per cent for companies not availing the benefits of exemptions.

Meaning, effective tax rate for new manufacturing companies will be 17.01 per cent inclusive of all surcharge and cess. The FM said companies opting for the 22 per cent income-tax slab won't have to pay minimum alternative tax. "Further, in order to provide relief to companies which continue to avail exemptions/incentives, the rate of Minimum Alternate Tax has been reduced from existing 18.5 per cent to 15 per cent", a Finance Ministry statement said.

Dalal Street turned euphoric and benchmark equity indices Sensex and Nifty recorded the biggest intra-day gains in a decade at 4 per cent, with the former rising over 1,500 points and Nifty 450 points. "These are protocols, as you know, which govt press conferences follow", she said in her second tweet. However, once they come to the new tax regime, they have to stay there.

"The government has taken a bold and proactive step to bring the much-needed tax reforms, which will boost investment and also aid to private cycle capex". After meeting the heads of public sector banks, the Finance Minister said that banks have started moving in line with the measures announced off late for providing liquidity.

The minister also announced doing away with surcharge announced in the Budget for the capital markets. The government has also made a decision to not levy enhanced surcharge introduced in the Budget on capital gain arising from sale of equity shares in a company liable for securities transaction tax. In another relief, the minister said listed companies which have announced buyback of shares prior to July 5, will not be charged with super-rich tax.

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