Indian Economy : News,Discussions & Updates

Nirmala Sitharaman brings early Diwali for India Inc: Effective corporate tax slashed to 25.17% for domestic cos
In order to promote growth and investment, Finance Minister Nirmala Sitharaman on September 20 slashed the effective corporate tax from 30 percent to 25.17 percent, inclusive of all cess and surcharges for domestic companies. However, the move, effective from April 1, is subject to the condition that they will not avail any other incentive or exemptions.

In effect, the corporate tax rate will be 22 percent for domestic companies if they do not avail any incentive or concession. The changes in the Income Tax Act and Finance Act will be made effective through an ordinance.

Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures would be Rs 1.45 lakh crore annually.

Companies opting for the 22 percent income tax slab will now not have to pay the Minimum Alternative Tax (MAT).

New domestic manufacturing companies incorporated after October 1 can pay the income tax at the rate of 15 percent without any incentives, the finance minister said. This means the effective tax rate for new manufacturing companies will be 17.01 percent, inclusive of all surcharge and cess.

Companies can opt for lower tax rate after the expiry of tax holidays and concessions that they are availing now, she added.

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The government has also decided not to levy the enhanced surcharge introduced in Budget 2019 on capital gain arising from sale of equity shares in a company liable for the securities transaction tax (STT).

Also, the super-rich tax will not apply on capital gains arising from sale of any security including derivatives in hands of foreign portfolio investors (FPIs).

In another relief, the minister said listed companies which had announced buyback of shares prior to July 5 would not be charged with super rich tax.

Also, the companies have now been permitted to use their 2 percent CSR spend on incubation, IITs, NITs, and national laboratories.

Sitharaman expressed confidence that the tax concessions would bring investments in Make in India, boost employment and economic activity, leading to more revenue.
Nirmala Sitharaman brings early Diwali for India Inc: Effective corporate tax slashed to 25.17% for domestic cos
 
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India jumps 11 spots on Global Economic Freedom index; it’s good news for sluggish economy
India has jumped 11 spots on Global Economic Freedom index from last year’s 96th spot to the current ranking of 79. The latest gain is promising news for the Indian economy which is currently reeling under slowdown, Indian think-tank Centre for Civil Society said on Friday. “It is well established that economic freedom fosters economic growth by affecting incentives leading to efficient use of resources. The freedom to choose and supply resources, competition in business, openness to trade, and legally protected property rights are central ingredients for economic progress,’” said Sudhanshu Neema, Lawyer and Economist, Centre for Civil Society. The Economic Freedom of the World Report 2019 surveyed a total of 162 countries.

India’s current ranking is better than one of the major economies of the world — China — which stood at 113th. Two Asian countries viz Hong Kong and Singapore continue their winning streak of last year with 1st and 2nd position respectively. New Zealand, Switzerland, the United States, Ireland, the United Kingdom, Canada, Australia, and Mauritius are in the top 10 and have most economic freedom measured via a gamut of factors including levels of personal choice, ability to enter markets, the security of privately-owned property etc. “According to research in top peer-reviewed academic journals, people living in countries with high levels of economic freedom enjoy greater prosperity, more political and civil liberties, and longer lives,” Centre for Civil Society said.

On the other hand, Iraq, Republic of Congo, Egypt, Syria, Democratic Republic of Congo, Angola, Algeria, Sudan, Libya, and Venezuela are at the bottom of the list where economic freedom is most curbed. “Some despotic countries such as North Korea and Cuba can’t be ranked due to lack of data,” the statement from Centre for Civil Society said.

Here’s how India scored on key components of economic freedom.

  • Size of government: 8.22
  • Legal system and property rights: 5.17
  • Access to sound money: 8.37
  • Freedom to trade internationally: 6.08
  • Regulation of credit, labour and business: 6.69
India jumps 11 spots on Global Economic Freedom index; it’s good news for sluggish economy
 
Govt’s move to benefit 3.5 lakh home buyers; provides Rs 10,000 crores for last mile funding
In a move to benefit 3.5 lakh homebuyers in India, Finance Minister Nirmala Sithraman has announced to contribute Rs 10,000 crore in affordable housing package. The government has made this announcement to help homebuyers stuck with under-construction homes by creating a special window to provide the last mile funding for housing projects which are non-NPA and non-NCLT and are net worth positive in the affordable and middle-income category. She added that there are many projects that are stuck with a cash crunch in their final delivery stage, which will be benefited from this fund. In another move to benefit the government servants, she assured to cut the interest rates on house building advance by linking it to 10-Year G-Sec yields.

Relief measures in housing sector:

  • Relaxation of ECB guidelines for affordable housing: Nirmala Sithraman assured to relax the norms for External Commercial Borrowings (ECBs) to facilitate the financing of homebuyers who are eligible under Pradhan Mantri Awas Yojana (PMAY).
  • Lowering of interest rate on house building advance: Finance Minister also assured that the interest on home building advance will be lowered and will be linked with 10-Year G-Sec yields. She added that the move will encourage more government servants to buy houses.
  • Contribution of Rs 10,000 crores to provide last mile funding: To focus on the construction of unfinished houses, the government has announced to create a special window to provide last mile funding for housing projects which are non-NPA and non-NCLT and are net worth positive in the affordable and middle-income category. Rs 10,000 crores will be contributed by the government and nearly the same amount will be contributed by the outside investors.
  • Organisation for credit enhancement: Nirmala Sitharman added that an organisation will be established to provide credit enhancement for infrastructure and housing.
“There is a need to change the definition of ‘affordable housing’. At present, the Government of India considers a unit with a price tag of Rs 45 lakh as ‘affordable’. We need to remove the price-cap while defining ‘affordable housing’ and focus on project size. I do not understand the logic why someone would think that Rs 45 lakh is a suitable benchmark for affordable housing when it makes no sense for projects in Delhi, Mumbai, and Chennai,” said Niranjan Hiranandani, President, NAREDCO.
Govt’s move to benefit 3.5 lakh home buyers; provides Rs 10,000 crores for last mile funding
 
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Taiwanese businesses eye markets in India as China-US trade war takes toll

Higher tariffs are encouraging companies from the island to look beyond mainland China for market potential

By Reuters
Published: 4:05pm, 21 Sep, 2019
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Liu Shih-chung, vice-chairman of Taiwan External Trade Development Council, and Tien Chung-kwang, representative of the Taipei Economic and Cultural Centre in India, are promoting economic ties with India. Photo: Reuters

Taiwan is pitching India as a potential business destination for its tech, car, renewable energy and farm sector firms as Washington’s trade war with Beijing pushes the island’s companies to look for newer markets, two officials said on Friday.

More than 10,000 Taiwanese companies, including Apple suppliers Foxconn and Wistron, have massive operations in mainland China, thanks to its tax incentives, organised supply chain and logistics, efficient business parks as well its cultural ties to the island.

But a trade war between Washington and Beijing has led to higher tariffs on goods worth tens of billions of dollars and disrupted global supply chains, prompting companies to look at other countries to escape higher tariffs.

“This trade war has encouraged more Taiwanese companies to figure out other options. So India and also other Asean countries are the alternative markets,” Liu Shih-chung, vice-chairman of the Taiwan External Trade Development Council, said.

The Association of Southeast Asian Nations (Asean) is a regional bloc of 10 nations in Southeast Asia, which promotes economic, political and military ties between members.

Beijing maintains that Taiwan, an island 177km (110 miles) off the Chinese mainland, does not qualify for formal diplomatic ties with any country. And though India has no formal relations with Taiwan, Taipei runs an economic and cultural centre in New Delhi, which operates as a de facto embassy.

Taiwanese firms were looking to invest in India’s technology, renewable energy, electric vehicle and farm sectors, Liu said.

“India is among the most important markets, among those 18 new southbound policy countries,” Liu said.

Taiwan’s southbound policy focuses on strengthening ties in culture, tourism, education and trade with 18 Southeast and South Asian countries.

It has opened four trade offices in India in the last few years and bilateral trade with Asia’s third-biggest economy stood at US$7 billion in 2018.

Trade between India and Taiwan would likely touch US$10 billion over the next few years, said Tien Chung-kwang, representative of the Taipei Economic and Cultural Centre.

Helping that trade were about 120 Taiwanese information and communications technology firms, which were setting up operations in India’s southern technology hub Bangalore, Tien said.

“These companies have already put in US$100 million,” he said

Taiwanese firms eye markets in India as China-US trade war takes toll
 
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