Nirmala Sitharaman Announces Corporate Tax Cut, Here's How Auto Industry Reacted
Nirmala Sitharaman's announcement to slash corporate tax has sent the benchmark Sensex up more than 1,200 points and the Nifty above the psychological 11,000 mark.
News18 Creative by Mir Suhail.
Finance minister Nirmala Sitharaman today announced to slash corporate tax to 25.17 percent inclusive of all cess and surcharges for domestic companies. Making the announcement at a press conference, Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
The impact sent the benchmark Sensex up more than 1,200 points and the Nifty above the psychological 11,000 mark. The auto index surged three percent bringing joy to the otherwise gloomy auto industry.
Here are the auto industry reactions on today's announcement:
Deepak Jain, President, ACMA
The announcement made by Hon’ble Finance Minister is indeed heartening and reassuring. Reduction in Corporate tax to 22 per cent for existing companies, 15 per cent for new manufacturing companies and relief on account of MAT are steps in the right direction to give manufacturing, investments and economic activity a boost. The measures will also put India in the league of competitive economies in the world.
We do hope that the Central Government in consultation with the Sates will consider ensuring a uniform GST rate of 18% on all auto components. Currently 60% of auto components are at 18%, while the rest are at 28%. A lower rate of GST will not only ensure better compliance but also help curb grey operations in the aftermarket.
Martin Schwenk, Managing Director & CEO, Mercedes-Benz India
Reduction in corporate tax to 22 per cent is a shot in the arm as it is directly correlated to economic growth. Reduction of corporate tax has been on the agenda and it will also boost ‘Make in India initiatives. It will promote investment, help sustain profitability during challenging times and should also improve buying sentiments, thus helping the auto sector in long term.
Maruti Suzuki Chairman RC Bhargava
New investors who are coming in have to pay a lower tax rate. That’s something that has never existed.
Looks like Diwali has come early.— Pawan K Goenka (@GoenkaPk) September 20, 2019
Dr Pawan Goenka, MD, Mahindra
Looks like Diwali has come early.
Nishant Arya, Executive Director, JBM Group
JBM Group welcomes the government's bold decision. The recent announcement by the finance minister aimed to bring structural reforms in the economy by lowering the corporate tax will help in uplifting the market. It comes at the right time to capture the slowdown. These measures will not only positively impact the revenues but will also strengthen India's stand globally and promote fresh investment.", said Mr. Nishant Arya, Executive Director, JBM Group.
Shekar Viswanathan, Vice Chairman and Whole-time Director, Toyota Kirloskar Motor
As announced by the Honorable Finance Minister of India, we are pleased to note that the corporate tax rate for large domestic companies has been slashed from 30% to 22% without incentive or exemption and that of new local manufacturing companies in India has been further lowered to 15% without incentive or exemption. It is also welcome that Minimum Alternative Tax (MAT) will not be applicable when adopting corporate tax under this new provision. This is a welcome structural change and comes as a great respite to corporates. This positive move from the Government of India will lead to further investments in the country as well as create more business opportunities. The ‘Make in India’ initiative will thus get a further impetus.
As far as automotive sector is concerned, we believe that on a mid to long term basis, the government should consider the merits of moving towards a carbon (fuel efficiency)-based GST taxation policy which will not only lead to huge fossil fuel savings but will also help in lowering emissions.
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