Bhubaneswar, 23 September, 2019: Union Minister Dharmendra Pradhan on Sunday asserted that the slew of measures including tax sops unveiled by the Centre will boost investment and growth and will transform the Indian economy into five trillion dollar strong.
Hailing the cut in corporate tax by the government as a big structural reform measure, the Petroleum and Steel Minister told reporters that the move will attract investment, spur economic activities and create job opportunities.
Pradhan said India was hit hard by global economic downturn, trade war between the US and China and attack on oil installations abroad. “However, inflation in our country is well under control despite adverse international economic scenario due to effective fiscal management,” he said.
“Benefits of a host of reform measures taken by the Centre recently to make Indian economy a five trillion USD strong and accelerate economic growth will be felt soon at every level,” the Union Minister said.
In the next five years, Rs 100 lakh crore will be injected into sectors such as roads, railways, waterways and airways to strengthen infrastructure, Pradhan said adding “it will strengthen the economy at the grassroots and pave way for a five trillion USD economy.”
Reduction of corporate tax rates for companies by almost 10 per cent to 25.17 per cent has made one of the lowest in Asia, he said adding corporate tax rate is now at par with that in Singapore and all these will play a major role in attracting investment and boosting economic activity.
While base corporate tax for existing companies has been reduced to 22 per cent from current 30 per cent, for new manufacturing firms, incorporated after October 1, 2019 and starting operations before March 31, 2023, it has been cut to 15 per cent from current 25 per cent, he said.
The effective tax rate for existing units, after considering surcharges and cess such as Swachh Bharat cess and education cess will be 25.17 per cent as compared to 34.94 per cent now. For new units it will be 17.01 per cent as against 29.12 per cent now, he said.
Though these measures will cost the government Rs 1.45 lakh crore in revenue annually, investment in manufacturing sector will get a boost which in turn will accelerate Prime Minister Narendra Modi’s Make in India drive, Pradhan said.
Positive effect of the measures has already been seen in stock exchanges and share markets, he said adding that Central PSUs are allowed to expand the scope of corporate social responsibility (CSR) expenditure and spend two per cent in government research bodies and incubators.
The merger of 10 nationalised banks to have four big ones and infusion of Rs 70,000 crore will facilitate loans at low interest rates to small businessmen as well as corporates, he said adding GST rates are also being further simplified.
Referring to the housing sector, Pradhan said Rs 20,000 crore home loans to the poor, middle class and upper middle class people will spur economic activities.
The Union Minister further said that the GST Council has also announced rate cut on several items to address the slowing economy. All GST rates will be effective from October 1, he said
He said the GST Council has approved proposal to cut rates on hotel tariffs. Rooms with tariff Rs 7,500 and above will now be taxed at 18 per cent instead of 28 per cent.
GST on rooms with tariff between Rs 1001 and Rs 7,500 is reduced to 12 per cent from 18 per cent, while there will be no GST on tariffs up to Rs 1,000, the minister said adding the move will boost the tourism sector in a big way.
Pradhan said plan is also afoot to keep agricultural produced out of the purview of GST and provide social security to small traders.