Reducing it in the face of fiscal slippage was a poor decisionespecially since it is not a given that lower corporate income tax leads to more investments
In the Union Budget 2018-19, the finance minister has extended the benefit of a reduced corporate income tax (CIT) rate of 25% to companies with revenue of up to Rs250 crore, from the limit of Rs50 crore announced in the previous budget. With a number of state polls this year and the general election next year, the finance minister has perhaps been conscious of the political ramifications of being branded a pro-corporate government, therefore stopping just short of an across-the-board reduction in CIT, and noting that the benefits will accrue primarily to small and medium enterprises. Justifying the cut, he has argued that higher tax savings by the corporate sector will lead to more investment and job creation. The step and the claims, however, need to be assessed critically.
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