(FE)
Finance minister Nirmala Sitharaman on Sunday clarified that the sharp cut in corporate taxes would not crimp government expenditure. The lower tax rate would dramatically improve India’s competitiveness, she said, pointing out that if players like Apple chose to set up shop in India, it would send out a big signal to the global investor community.
Sitharaman asserted there would be no cutback in expenditure to compensate for the potential revenue forgone of Rs 1.45 lakh crore in FY20 due to the sharp cut in corporate tax rates of nearly 10 percentage points. On the contrary, the FM said expenditure secretary Girish Chandra Murmu has been holding weekly meetings with senior officials of various departments to monitor the pace of expenditure. The laggards, she added, are being pulled up.
India could now potentially draw foreign investors scouting for locations to beat the impact of the US-China trade war, as no country in South Asia offered a standard corporation tax rate of 15%, the FM said. The tax cuts, she argued, would not just boost domestic investment but also lead to demand-side growth, as these two were inter-linked.
