Describing the centre’s significant step of slashing the corporate tax rate as a bold measure, RBI Governor Shaktikanta Das on said that the move has made India an attractive destination for foreign investment.
Announcing the biggest reduction in 28 years, the centre on Friday announced a cut in corporate tax rate by almost 10 percentage points in a bid to pull the economy out of a six-year low growth and a 45-year high unemployment rate by energizing private investments with a Rs 1.45-lakh crore tax break.
As per the government announcement, the base corporate tax for existing companies has been brought down to 22 percent from the current 30 percent; and for new manufacturing firms, incorporated after October 1, 2019, and starting operations before March 31, 2023, it was slashed to 15 percent from the current 25 per cent.
“It is a very bold measure, and it is a highly positive step. India’s corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia. So far as international investors are concerned, so far as FDI is concerned, I think India stands definitely in a very competitive position and would be able to attract higher investments,” Das said.
Speaking on domestic investors, he said, they can now avail more cash so they’ll be able to undertake better capital expenditure. They can now invest more and some of them can even deleverage their liabilities which will strengthen their balance sheets, he said after meeting Union Finance Minister Nirmala Sitharaman.