38,378.02 38,014.62 36,214.92 Big five takeaways 1 2 3 CHENNAI SATURDAY SEPTEMBER 21, 2019 `5.00 PAGES 26 LATE CITY EDITION CORP TAX @ 22% Corporate tax rate to be 22% without exemptions, plus surcharge and cess, with retrospective effect from April 1, 2019. No MAT on such firms BEST RATE IN ASIA Effective corporate tax rate after surcharge will be 25.17%. This makes India’s tax rates comparable with competing Asian peers such as Singapore MAKE IN INDIA To attract investment in manufacturing, local companies incorporated after October 2019 will pay 15% tax. This is expected to boost Make in India efforts 4 BULLISH The markets gave a big thumbs up to the tax cut with BSE Sensex rallying 1,921.15 points — the biggest single-day jump in a decade SUPER RICH TAX Super rich tax on capital gains announced in Budget 2019 rolled back. The move is expected to stabilise the flow of funds into the capital markets 5 BUYBACK RELIEF No tax on buyback of shares of listed firms that announced buyback before July 2019. This one-time exemption could save $1 billion in taxes for Indian firms CHENNAI ■ MADURAI ■ VIJAYAWADA ■ BENGALURU ■ KOCHI ■ HYDERABAD ■ VISAKHAPATNAM ■ COIMBATORE ■ KOZHIKODE ■ THIRUVANANTHAPURAM ■ BELAGAVI ■ BHUBANESWAR ■ SHIVAMOGGA ■ MANGALURU ■ TIRUPATI ■ TIRUCHY ■ TIRUNELVELI ■ SAMBALPUR ■ HUBBALLI ■ DHARMAPURI ■ KOTTAYAM ■ KANNUR ■ VILLUPURAM ■ KOLLAM ■ WARANGAL ■ TADEPALLIGUDEM ■ NAGAPATTINAM ■ THRISSUR ■ KALABURAGI WILL IT ATTRACT FDI? Profitability of companies will rise. Fresh investments from abroad are likely, as India’s rates now compare favourably with South East Asian economies WILL IT LEAD TO PRICE CUTS? Prices of FMCG items may come down as makers are likely to pass on part of the profit bonanza to consumers THE INDIA INC STORY Big-bang bonanza for India Inc as effective tax cut to 25%; markets cheer; experts voice concern about fiscal impact A N U R A D H A S H U K L A @ New Delhi YESTERDAY Bogged down by a maze of taxes, economic slowdown, a drop in demand and regulatory squeeze, India Inc was wary of taking risks WILL IT BOOST GDP GROWTH? Experts say more steps are needed to boost demand by putting money in the pocket of common people WILL IT WORSEN FISCAL DEFICIT? TODAY The big-bang tax breaks ended the maze and suddenly lifted the spirits, with captains of industry gushing on posting big growth With `1.45 lakh crore foregone in revenue, fiscal slippage is inevitable. The deficit may widen from 3.3% to 4% WILL RBI CUT RATES? If high economic activity leads to inflation, RBI may decide to hold rates EXPRESS READ Once again, TN wins Krishi Karman award Tamil Nadu has been chosen for the Centre’s Krishi Karman award for the fifth time since 2011. The award for 2017-18, to be given in the category of oil seeds, carries `2crore cash | P5 Collegium now picks Kureshi for Tripura The SC collegium has recommended the elevation of Justice Akil Kureshi as the Chief Justice of Tripura HC, cancelling the earlier proposal to make him Madhya Pradesh HC CJ P11 Caffeinated drinks GST shoots up Caffeinated beverages will cost more as the GST Council on Friday raised tax on them to 40% — from the current 18% — while slashing the rate on hotel room tariffs P11 Tax tonic to unleash animal spirits TOMORROW It’s time to soar and achieve India’s dreams. But how the govt will strike a balance between giveaways and fiscal math remains to be seen CALL it a jaw-dropping announcement if you will. Finance Minister Nirmala Sitharaman on Friday sprang a huge surprise by effecting the biggest-ever slash in corporate tax rates in 28 years to slay the slowdown demon, drawing cheers from the markets and the industry alike. The tax cut, which comes with retrospective effect from April 1, will apply to all domestic firms that don’t avail any incentives. For domestic firms, the tax has been axed from 30% to 22%, while for manufacturers setting up shop after October, it was down to 15%. Companies that pay Minimum Alternate Tax will also be given relief with the tax rate coming down to 15% from 18.5%. Sitharaman said the changes in the Income Tax Act and Finance Act will be made effective through an Ordinance. Revenue Secretary Ajay Bhushan Pandey pointed out that the “current effective tax rate for companies with turnover above `400 crore stood at 34.9% taking all surcharges into account. That rate is now brought down to 22.17%. For new manufacturing firms, the effective rate was 29.1%. Now, this goes down to 17.01%.” Markets gave a big thumbs up to the announcements, which were made during market hours. The BSE registered a massive intra-day rise of 2,284.55 points to a peak of 38,378.02, before settling 1,921.15 points higher at 38,014.62. The broader NSE Nifty, too, zoomed 569.40 points to end at 11,274.20. Analysts said it was the highest gain for the two bourses in a single day since May 18, 2009, when the UPA came back to power. As corporate tax is estimated to be a key revenue source constituting more than 20% of total taxes. the cut will prove to be costly for the government, which will be foregoing some `1.45 lakh crore annually . “We are conscious of the effect tax rebate will have on the fiscal deficit; we will reconcile numbers,” Sitharaman said, without explaining how it will be done. The reduction of corporate tax rate was a long pending demand of India Inc. Former finance minister Arun Jaitley had promised two years ago that the Modi government will move to a single 25% corporate tax rate for all companies. The higher surcharge on capital gains on sale of equity announced , in the Budget, was also rolled back. “These are definitely bold and welcome measures. It will augur well for our economy,” RBI Governor Shaktikanta Das said. Chinmayanand finally arrested on rape charges N A M I TA B A J PA I @ Lucknow ALMOST a month after allegations of sexual harassment and rape of a law student surfaced against BJP’s former Union minister Swami Chinmayanand, he was arrested in Shahjahanpur by a special investigation team (SIT) of the UP Police on Friday . He was later remanded in 14d ay j u d i c i a l custody . The law stuChinmayanand dent had on Wednesday threatened to immolate herself if the 72-yearold swami was not attested. Perhaps as a balancing act, the SIT also arrested a friend of the complainant and her two cousins for allegedly trying to extort `5 crore from Chinmayanand, based on a cross-FIR filed by him. The FIR also purportedly lists the law student as an accused, though she has not been arrested. According to SIT chief Inspector General Naveen Arora, Chinmayanand confessed to almost all the charges against him during custodial interrog ation. “He said he was ashamed of what he had done,” Arora revealed. FULL REPORT: P9 BJP flags being installed in Trust Puram area of Kodambakkam on Friday, to celebrate PM Narendra Modi’s birthday | ASHWIN PRASATH Banners gone, parties find ways to break law O M J A S V I N M D @ Chennai THE death of Subashri has not deterred cadres of political parties from attempting to please their leaders. On Friday, both the DMK and the BJP were found to have installed party flags in many parts of Chennai. The flags, attached to iron poles, were fixed on roads, medians, and even in storm water inlets. They had also encroached upon platforms, denying walking space for commuters. Though both parties have avoided the usage of banners, what they probably did not know is that installation of such flags is also illegal. The BJP cadre set up around 20 flags on the roads around Royapuram to celebrate Prime Minister Narendra Modi’s birthday However, they did not have a . valid permission from the Corporation. On the Cemetery Road at Royapuram, BJP flags were found tied to lamp-posts, electric boxes, and even in front of the RSRM bus stop, causing disturbance to commuters. Visitors at the RSRM Hospital, around which the flags were tied, said the party workers did so even while the traffic policemen were standing there, watching. BJP had organised a blood donation P3 camp at the hospital. PEEK A BOO ‘Shocked’ by cop, biker comes under lorry E X P R E S S N E W S S E R V I C E @ Chennai CHENNAI motorists are not unfamiliar with police personnel who engage in a game of Kabaddi with violators. In most cases, it ends with the biker getting caught and his key being yanked off, or the personnel being outsmarted. One such incident got out of hand on Friday when a policeman became the reason for a woman to fall off her bike and fracture her leg. Soon, a mob gathered and set a policeman’s motorbike on fire. K Priya, a resident of Sholavaram, was riding without wearing helmet when she saw a team of police personnel blocking vehicles near the police booth at Gandhi Nagar, near Red Hills, and conducting checks. A senior police officer claimed they were only conducting a ‘routine check up’ to stop traf fic violators. When the woman neared the booth, one policeman allegedly jumped in front of her vehicle to stop her. Alarmed, she lost balance and fell off her bike. “A lorry that was following her closely hit her bike and ran over her right leg, fracturing it,” said an eyewitness. Soon, an irate mob gathered and smashed the window panes of the lorry and torched a bike belonging to the police team. Boom or bubble? Jury is out with fiscal number crunching It will give a great stimulus to MakeInIndia, attract private investment from across the globe, create more jobs PM Narendra Modi This is a great move which will revive growth and investment Kiran Mazumdar Shaw, Chairman, Biocon India is making a conducive environment where more money can come in Deepak Parekh, chairman, HDFC This is a decisive move to enhance competitiveness of Indian industry Dr Prathap C Reddy, Chairman, Apollo Hospitals J AYA N TA R O Y C H O W D H U R Y & S U N I T H A N AT T I @ New Delhi / Hyderabad WHILE the big-bang corporate tax reforms cheered India Inc and markets, many top economists wondered whether these would reverse the slowdown in the economy while , other analysts warned of the fiscal deficit ballooning. Most economists felt that while the move would give a supply-side boost to investment, it would not address the real concern of slow demand afflicting the economy . “I won’t say it is too late, but perhaps too little … It is a welcome supply-side measure, it is a good reform, but to expect it to work miracles is perhaps too much as the problem we are facing is demand side,” said Prof Govinda M Rao, former Member of the Prime Minister’s Economic Advisory Council. India’s GDP grew by just 5% in the April-June 2019, its slowest quarterly expansion in seven years. The country’s passenger vehicle sales had contracted 32% in August. Consumer goods companies also reported worsening sales on the weak con- sumer demand. “Had the huge sum being foregone in taxes been used to increase the income of the lower income group, the money multiplier effects would have worked and demand would have been boosted considerably. Raising corporate incomes may result in savings, but may not result in any immediate investment upside,” said Pronab Sen, former chairman, National Statistical Commission. Traditionally demand side weak, nesses are addressed by either an expenditure push by the government, which creates new jobs and thus new demand or by cutting personal income taxes to put more money into the pockets of spenders. “Today’s announcement has to be backed up by front-loading spending on infrastructure and perhaps a more direct stimuli to demand,” said N R Bhanumurthy of the National Institute of Public Policy and Finance. The country’s fiscal deficit is also expected to surge 70 basis points to 4% of the GDP. In the absence of expenditure cuts, deficit could even P10, 15 spike to 4.1% of GDP .
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21092019 of The New Indian Express-Chennai
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