GST Council: Tax on caffeinated drinks hiked, hotel tariffs reduced

Clay Curtis
September 21, 2019

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. May it be so and the serious crisis that has come over people's livelihood should end.

The effective tax rate for these companies would now be 25.17 percent, inclusive of surcharge and cess.

The changes in the Income Tax Act and Finance Act will be made effective through an ordinance.

She lowered effective corporate tax further for domestic firms incorporated on or after October 1 to 17%, with the condition that they begin production by March 2023.

The step will promote growth and investment, Sitharaman said, speaking from the western Indian city of Panaji.

While the reduction brings India's corporate tax rate closer to peers throughout Asia and will support the business environment and competitiveness, a host of cyclical factors, including rural financial stress, weak corporate sentiment, and a slow flow of credit in the financial sector, remain headwinds to near-term growth, it pointed out.

The new corporate tax rate for domestic companies, excluding surcharges, makes India more competitive than neighboring Bangladesh, where the textile industry is growing, but slightly less attractive than Vietnam, which has wooed businesses affected by the U.S.

Sitharaman said that the GST on caffeinated beverages has been increased from 18 to 28 per cent with 12 per cent additional cess which takes the total tax rate to 40 percent.

Walmart to stop selling e-cigarettes amid vaping illness reports
Anne Schuchat, principal deputy director of the CDC, said during a media briefing on Thursday . The crackdown has also spread overseas, where this week India said it would ban e-cigarettes.

Welcoming the move, N Chandrasekaran, Chairman, Tata Sons said, "This is a big respite which would give the required stimulus to the economy".

He also said this would create move jobs for crores of Indians.

In effect, the corporate tax rate will be 22 percent for domestic companies if they do not avail any incentive or concession.

Mumbai: The spectre of fiscal slippages awaits the country after the massive tax giveaways, which though will boost the sputtering growth engine and is positive from a long-term perspective, warned analysts. "The massive amount of savings in corporate tax due to the measures declared today aggregating to ₹1,45,000 crore is a timely stimulus for the revival of our economy", Mr. Jindal told The Hindu. The news sent shares sharply higher while bond yields spiked to a near three-month peak on speculation that the government may have to borrow more to meet its expenditure needs.

The finance minister said that supply of goods and services to the International Federation of Association Football (FIFA) and other specified persons will be exempted for the Women's Under-17 World Cup, which is to be held in India.

"These measures would increase the chances of higher fiscal deficit and government may have to resort to spending cuts or embark on higher disinvestments", Arun Thukral, the head of the brokerage Axis Securities, said.

"On one side is the reality that 1.45 trillion rupees is sacrificed".

The Singapore-based economist says these types of firms make up more than 90 percent of companies, comprising the "backbone of India's economy", but may not receive any relief from the new tax measures.

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