We will bring tax on equity investments on a par with global rates, says PM in New York
Modi says the sharp cut in corporate taxes is a revolutionary step from the point of view of investors
New Delhi: Prime Minister Narendra Modi promised to further simplify India’s tax regime, including bringing tax on equity investments in line with global standards, making a strong pitch to global business leaders to invest in India.
India will not shy away from taking the toughest decisions, Modi said at the Bloomberg Global Business Forum in New York that was attended by top executives of some of the world’s biggest companies. “We will undertake necessary modifications on a regular basis on tax-related laws and to bring tax on equity investments on a par with global tax regime," he said.
The prime minister may be referring to the abolition of long-term capital gains tax and dividend distribution tax, said Rahul Garg, partner at PwC India.
“In many countries, capital gains tax does not apply to foreign investors. There is a debate on whether India should mature to that or not," he added.
Reminding business leaders that the government has abolished more than 50 laws that had became obstacles on the path of economic progress within a short period in his second tenure as prime minister, Modi said this is just the beginning.
“There is a long haul ahead of us. This is a golden opportunity for the global business community to partner with India in this journey," he added.
Modi termed the government’s recent decision to slash corporate tax rates as revolutionary from the point of view of investments. “Whoever I spoke to in the business world after this decision, they said they consider it a historic step," he added.
On 20 September, finance minister Nirmala Sitharaman slashed tax on income of companies, making India one of the lowest tax regimes in Asia. The cut in corporate tax will not only help India compete for investments with other destinations in Asia, but also help boost private investments and lift economic growth in Asia’s third-largest economy.
On Wednesday, Asian Development Bank said the corporate tax reductions will uplift private investment, including foreign direct investments, and enhance India’s global competitiveness.
Inviting foreign investments in sectors such as infrastructure, startups, defence and real estate, the prime minister said his administration has decided to invest $1.3 trillion in modern infrastructure.
“A road map for qualitative and quantitative leap in India’s growth story has been identified. We have set a target of making India a $5 trillion economy. To achieve this big target, we have capability, courage and conditions with us," he added.
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