Corporate tax cut 'surgical strike' on negative sentiments in economy: Analysts
The reactions came as the government on Friday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs.
Dubbing the government's move of slashing income tax rate for companies as a "surgical strike" on negative sentiments in the economy, markets analysts said the step will ease liquidity concerns of India Inc and boost investment.
The reactions came as the government on Friday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs.
"This is yet another surgical strike on bears and negative sentiments in the economy which will create an environment of surplus in the hands of corporates for making further investments and ease their liquidity concerns.
"The reduction to 22 per cent in corporate taxes will result in massive release of Rs 1,45,000 crore immediately in the economy which will boost sentiments and bring in real surplus to the corporates," Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote said.
According to Mustafa Nadeem, CEO, Epic Research, reducing the corporate tax rate is a big boost for the market.
"This is huge for the market. There were few announcements that were keeping sentiments in check as FM was trying to boost market sentiments and improve the state of the economy by boosting exports, banks consolidation, recapitalisation and so on but reducing the corporate tax rate is a big boost," Nadeem said.
The domestic equity market cheered the move, with the benchmark BSE Sensex skyrocketing a record 1,955.46 points to 38,048.93 in intra-day trade.
Leading bourse BSE also welcomed the move.
" These decisions will be celebrated as historic and will go a long way in improving 'Ease of Doing Business In India' even further," Ashishkumar Chauhan, MD & CEO, BSE said.
"There are several other fiscal measures that have been announced which all point to the government's commitment to promoting the business activities and enhance job creation manifold. These announcements will further boost the investor confidence and start the investment cycle," he added.
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