Finance Minister Nirmala Sitharaman Friday announced a new corporate tax rate of 22 per cent without exemptions and said the effective tax rate including surcharge and cess would now stand at 25.17 per cent.
These measures, estimated to result in a revenue loss of around Rs 1,500 crore a year, are expected to give a boost to the tourism and hospitality sectors ahead of the festive season. The decisions were taken at the Council’s 37th meeting.
When asked about the impact of the measures on the fiscal deficit, Finance Minister Nirmala Sitharaman said the government is conscious of the impact and expects the economic buoyancy resulting from these changes to generate significant resources.
"This is a bold and welcome decision. During Arun Jaitley's tenure as FM, the corporate tax was reduced from 30 to 25 per cent. This was one of the hurdles, and the measures will help revive the economy," the RBI Governor said.
To stabilise the flow of funds into the market, the enhanced surcharge announced in Budget 2019 will not apply on capital gains arising on sale of any security, including derivatives by foreign portfolio investors, the Centre announced.
Shaktikanta Das said the central bank had sensed a slowdown in the economy in February and that the situation is the same in “almost all advanced economies”. "RBI had noticed the signs of a slowdown as early as February this year," he said.