India cuts tax rate to 15% for new manufacturing units

PALAK SHAH Mumbai | Updated on September 20, 2019

This move is to capitalise on the ongoing trade war between US-China

India has finally taken a massive step to take advantage of US-China trade war. On Friday, Finance Minister Nirmala Sitharaman announced a tax rate of 15 per cent for new manufacturing units in the country that start production before 2023. Along with surcharge, this tax rate will be around 17 per cent. It is one of the lowest tax rate for manufacturing units globally. China’s current rate of value added tax is 16 per cent for manufacturing units and it involves other surcharge.

Corporate capex could pick-up experts said. 

India’s key benchmark indices Sensex and Nifty witnessed a massive short covering. The Sensex gained 1,300 points and Nifty index was up 300 points. Both indices were up nearly 3 per cent as Sitharaman was addressing a press conference in New Delhi.

“India is ready to attract new manufacturing units from world over,” Sitharaman said in the conference. “Manufacturing units should have office and run the businesses in India to avail tax benefit. Larger principal is that exemptions on taxes will have to be brought down.”

"Immidiately we would be paying less tax. But we will have to work out on the numbers," said Keki Mistry, VC and CEO, HDFC in a television interview after the announcement by Sitharaman.  

Also read: Government slashes corporate tax to 25.17% for domestic companies

India also cut the effective rate of corporate tax to around 25 per cent including surcharge. In the stock markets, additional surcharge imposed on capital gains tax for all category of investors on listed securities and mutual fund units was withdrawn. Also, companies that had announced buy-back of shares before June 5 will have to pay no tax. A buy back tax of 20 per cent was announced in budget.

“India wants to stabilise the flow of foreign money into India,” Sitharaman said.  


Published on September 20, 2019

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