IMF Lauds India’s Decision To Slash Corporate Income Tax, Brought Positive Impact On Investment
Mumbai: The International Monetary Fund (IMF) recently lauded India’s decision on slashing corporate income tax which has brought a positive impact on investment.
Speaking to reporters, Director of IMF, Asia, and Pacific Department, Changyong Rai said that India still has limited fiscal space, so they have to be cautious but we support their corporate income tax cuts as it positively impacts investment Puts.
Earlier, finance minister Nirmala Sitharaman announced that the government will be slashing corporate tax rates to 22 percent for domestic companies and 15 percent for new domestic manufacturing companies and other fiscal reliefs in order to promote growth and investment.
A top IMF official lauded the government for its decision to reduce corporate tax rates but said India should address non-bank financial sector issues
“Where reforms have been undertaken, the issue of a non-bank financial institutions, including efforts to recapitalize state banks, remains partially unresolved and regulatory equity is one of the issues that need to be achieved,” she said.
The government is aware of it, Anne-Marie Gulde-Wolf, Deputy Director, Department of Asia and the Pacific, IMF said, “We also had an FSAP. So there are issues to work on and that is something that has not yet been fully achieved, but it has been emphasized. While problems at this level Yes, it is very important to focus on the lending methods of non-bank financial institutions. “
In response to a question, she said that India has a high level of debt overall and fiscal consolidation needs to be prioritized. “However, in the context of a federal system, implementing fiscal consolidation is far more complex. Different states have different levels of fiscal structural issues and challenges.”
One of the ways the IMF has engaged in this question is that it is a regional training institute that has started working with individual states on strengthening fiscal management at the state level, Gulde-Wolf said.
Total revenue for a corporate tax rate reduction and other relief was estimated at Rs 1,45,000 crore. It was called the biggest announcement by the Modi 2.0 government to fight the recession, pulling its GDP growth to a six-year low of 5 percent in the April-June quarter of the current fiscal.
A few days ago, the IMF trimmed India’s growth estimate to 6.1 percent from 90 original points, the second downward revision in seven months and a total reduction of 120 basis points. 100 basis points are equal to one.
(With Agency Inputs)
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