MUMBAI: Reserve Bank Governor Shaktikanta Das on Friday said the reduction in corporate tax is a bold measure which will be highly positive for the economy.
In a major fiscal booster, Finance minister Nirmala Sitharaman Friday morning slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies cheering everyone and sending the market to decadal single-day rally.
These are definitely bold and welcome measures. It will augur extremely well and will be highly positive for our economy, Das said at an India Today organised an event.
He said one of the major drawbacks that we had was high corporate tax rates and today's drastic cut in the same will take the country closer to the rates that prevail in emerging economies such as Thailand, and the Philippines.
Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually.
This, she said is being done to promote investment and growth. In effect, the corporate tax rate will be 22 percent for domestic companies, if they do not avail of any incentive or concession, she said.
The changes in the Income Tax Act and Finance Act will be made effective through an ordinance, she said.
The announcement sent the market skyrocketed with the broader Nifty making the largest single-day rally in a decade by over 550 Points and the Sensex jumping over 1900 points soon after the announcement.