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India on reform spree, slashes corporate tax as stocks surge

India on reform spree, slashes corporate tax as stocks surge

Mumbai - Finance Minister Nirmala Sitharaman said the main rate for domestic firms would fall to 22 per cent from 30 per cent.



By AFP

Published: Sun 22 Sep 2019, 12:08 AM

India slashed corporate taxes on Friday to among the lowest in Asia as part of its drive to kickstart the stuttering economy, sending stock surging as analysts predicted a renewal of interest in the subcontinent.
Finance Minister Nirmala Sitharaman said the main rate for domestic firms would fall to 22 per cent from 30 per cent as New Delhi aims to attract companies spooked by the China-US trade war that has hammered global supply chains.
The move looks to give a lift to Prime Minister Narendra Modi who faces increasing pressure to relight once-stellar economy after five consecutive quarters of slowing growth saw India this year lose its status as the fastest-expanding major economy to China.
Modi tweeted that the announcements "clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $5 trillion economy."
Sitharaman said that to "attract fresh investment in manufacturing and boost Make In India" the tax rate for new companies would be cut to 15 per cent from 25 per cent, the Press Trust of India news agency said. She told reporters the new rates would be "comparable with the lowest tax rates in South Asian region and in South East Asia".
The announcement sent shares soaring more than five per cent in Mumbai - the biggest jump in 10 years - while the rupee firmed against the dollar.
Indian stock markets have been on course for the biggest quarterly exodus since at least 1999, with foreign funds having dumped a net $4.9 billion worth of stocks since June, Bloomberg News said.
Among its latest measures are lifting a ban on government departments buying new cars as it looks to support the auto sector, which saw sales dive 41 per cent last month, the biggest drop on record.


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