Other things that come under the new GST rate
The GST on railway wagons,coaches wereincreased to 12 perc ent, up from 5 per cent.
The GSTon 10-13 seater passenger vehicles has been reducedto 1 per cent from the earlier 3 per cent.
The Council also decided to make annual return optional for small taxpayers below the annual threshold of Rs 2 crore for FY18 and FY19.
FMNirmala Sitharaman also said that the GST Council exempted silver imported for re-export as jewelry from GST. Also, the tax rate on the supply of machine job cut to 12 per cent from 18 per cent.
The list of what gets costlier, what gets cheaper
The GST Council on Friday announced somechanges pertaining tocertain commodities. It ranges fromincreasing rates on caffeinated drinks to reducing tariff on hotel rooms with an aim to simplify and rationalise the taxation.
The rates oncoffee washiked to 28 per cent from the previous 18 per cent, while the rates on hotel rooms with tariff above Rs 7,500 have been cut to 18 percent, down from 28 percent. FMNirmala Sitharaman said that the Council also approved nil GST rates on hotels with tariff up to Rs 1,000.
The GST rate on diamonds was reducedto 1.5 per cent from the earlier 5 per cent. The GST onalmond milkwasset at 18 per cent.
A uniform GST rate of 12 percent was approved on polypropylene and polyethylene (woven and non-woven) whether or not laminated for packing.
Tax rates now comparable to the US: Piyush Goyal
Commerce minister Piyush Goyal Friday said he "hopes" the tax relief measures announced by the government for the corporates will give the necessary fillip to growth that has been sputtering for long.
The measures also get our tax rates comparable to those in the US and in South Asian economies, if one were to include the exemptions thrown in, Goyal said, adding these will help push investments up.
With an eye to push growth, which has slipped to a six-year low in the June quarter--which is even below that of Pakistan's 5.4 percent--finance minister Nirmala Sitharaman earlier in the day announced a raft of changes in direct taxes, including a 10 percentage points cut in corporation taxes to 25.17.
The measures, which come a day after Reserve Bank governor Shaktikanta Das had warned against any fiscal measures to spur growth saying the government has little fiscal space to do so, will entail a revenue sacrifice of Rs 1.45 lakh crore to the exchequer this year.
The Centre Friday unleashed a huge fiscal stimulus by announcing big cuts in corporate tax rates to push India's stuttering economy, a move that can boost investment by companies and bring down cost of goods for consumers, thereby giving a leg-up to the demand slump.
Announcing the steps that caught the street by surprise, Finance Minister Nirmala Sitharaman said the basic corporate tax rate will be cut to 22% from the current 30% for all existing domestic firms and to 15% from 25% for the those being set up after October 1. The effective tax rate for domestic companies will, however, be 25.17% inclusive of all surcharges and cess.
The step elicited immediate cheer from investors and the 30-share BSE Sensex saw a jump of over 1,000 points minutes after the announcement. The rupee too traded at the day's high of 71.01 per dollar immediately after the announcement.
Govt leaving no stone unturned: Narendra Modi
"The announcements in the last few weeks clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $5 Trillion economy", Narendra Modi tweeted.
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Das welcomes corporate tax cuts, says its a bold move
Reserve Bank Governor Shaktikanta Das on Friday said the reduction in corporate tax is a bold measure which will be highly positive for the economy.
In a major fiscal booster, Finance minister Nirmala Sitharaman Friday morning slashed effective corporate tax to 25.17 percent inclusive of all cess and surcharges for domestic companies cheering everyone and sending the market to decadal single-day rally.
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This is huge for the market, says Mustafa Nadeem, CEO, Epic Research
Mustafa Nadeem, CEO, Epic Research said, "This is huge for the market. There were a few announcements that were keepingsentiments in check as FM was trying to boost market sentiments and improve the state of the economy by boosting exports, Banks consolidation, Recapitalization and so on but reducing the Corporate tax rate to 22% or domestic players and 15% for new entrants setting up manufacturing units is a big boost. It has two important effects. One the domestic environment which was sluggish due to slowdown is going to fade with lowered corporate taxes and second the Make in India will see a boost as well.
Markets, on the other hand, has totally taken it as something which has turned the table for medium to long term. Today's reaction is totally out of surprise and it will be acting as strong support for the coming weeks and months. 10700 - 10800 is now set to be a strong base for Nifty and we may see continuity in positive momentum on any dips from here on."
Motilal Oswal reacts to Govt's move on tax rate cut
"We do believe that we need fiscal stimulus to get out of this slowdown and monetary policy alone could not do that. Hence, this move is very good for the country and markets! This is +ve for all companies - tax rate goes down for cos from 300-1000 bps!", Motilal Oswal, CMD, Motilal Oswal Financial Services.
Prabhudas Lilladher views on 'Slashing Corporate Tax Rates'
Ajay Bodke, CEO PMS Prabhudas Lilladher said, "In a major boost to revive flagging animal spirits & position India as one of the most attractive business destinations, the government of India has announced a slew of measures that would act as a force multiplier for the flagging economic engine. By slashing corporate tax rate to 25% from 35 % (22% from 30% without exemptions) for existing domestic companies & an extremely attractive rate of 15% for new companies setting up manufacturing operations after 1st October 2019 and commencing operations before 2023, government has rolled out a red carpet that would ensure hundreds of billions of dollars of FDI & FII flows over the medium term.
Equity markets would rejoice as the multi-year cycle of earnings downgrade will finally come to an end. A significant valuation re-rating will follow as the market would start building in a virtuous cycle of an upgrade in earnings trajectory over the medium-term due to both tax savings & boost in revenues due to perk-up in aggregate demand. The engine of domestic consumption will fire first followed by the investment engine on the back of corporates regaining their mojo. Incentives announced last week for the export sector will also support the third engine of growth i.e. exports.
It is in a true sense an early arrival of festival of lights (Diwali) and banishment of a long period of darkness & gloom bothering the Indian economy."
The reduction in the corporate tax rate makes India attractive for new investments: Frank D'Souza
"The reduction in the corporate tax rate is a welcome move and makes India attractive for new investments. Also, the changes to CSR contributions and the relief on buy-back tax, will address past concerns and also help in channelling funds towards R&D initiatives," saidFrank D'Souza Partner and Leader Corporate and International Tax.
Announcement on tax will help companies like Coal India, Infosys and Wipro: Piyush Goyal
"Congratulations to PM Narendra Modi ji and FM Nirmala Sitharaman for the pathbreaking announcement done to cut corporate taxes for domestic & new manufacturing companies which will boost ‘Make in India’, promote Investment & will create huge employment opportunities," Minister of Railways and Commerce & Industry, Piyush Goyal tweeted.
NITI Aayog CEO congratulates FinMin on her move
Brilliant move! Way to go! Will provide a major impetus to animal spirits. Congrats, Nirmala Sitharaman, said NII Aayog CEO, Amitabh Kant.
Doubtful whether the investment will revive: Jairam Ramesh on corporate tax cut
"A headline-itis afflicted, panic-stricken Modi Sarkar has cut corporate tax rates less than 3 months after a Budget and 4 months before the next one. This is welcome but it is doubtful whether the investment will revive. This does nothing to dispel the fear that pervades in India Inc", tweeted Congress MP Jairam Ramesh.
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Key takeaways from FM Sitharaman's press conference
Finance Minister Nirmala Sitharaman on Friday proposed new provisions in the Income Tax Act to attract fresh investment in India.
Here are the key takeaways from her press conference, prior to the GST Council meet in Goa.
Aarin Capital Chairman, Mohandas Pai welcomes FinMin's tax rate cuts
"The fiscal stimulus of 1% of GDP to boost corporate capex. Full tax paying companies see a 13% increase in EPS numbers thereby eliminating the anemic earnings growth" Ashish Kumar, Partner, Infinity Alternatives.
Sensex surges 1,100 points over hopes of lower tax
Indian markets on Friday surged after the government proposed thelowering of corporate tax for domestic firms and new manufacturing companies.
In the early morning trade, 340-share benchmark index of Bombay Stock Exchange (BSE) Sensex surged by a whopping 950 points.
Watch 37th GST Council meet live here.
Meanwhile,Rupee rallies 66 paise to 70.68 against US dollar on FM announcements to boost growth.
Total revenue foregone for the reduction in corporate tax rate and other reliefs are estimated to Rs 1.45 lakhcrores per year: FinMin
For listed companies which made an announcement for public buyback before July 2019, it is provided that tax on buyback on shares of such companies will not be charged: Sitharaman
In order to stabilize the flow of funds into the capital market, the enhanced surcharge which was included in the Budget of 2019, shall not apply on capital gains arising on sale of equity share, says FinMin
To attract investment in manufacturing, local companies incorporated after October 2019 will pay tax at 15 percent, Finance Minister states.
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Effective corporate tax rate after surcharge to be 25.17 percent, says Nirmala Sitharaman.
To provide relief to companies which continue to avail incentive or exemptions, even for them we are giving a Minimum Alternate Tax(MAT) relief, the MAT rate has been reduced to 15% from the existing 18.5%, adds Nirmala Sitharaman.
Corporate tax rate to be 22% without exemptions, inclusive of surcharge and cess. No MAT applicable on such companies: Nirmala Sitharaman.
In order to attract fresh investment in India, newprovision has been included in the Income Tax Act: Nirmala Sitharaman
FinMin proposes to slash to corporate tax rates for domestic companies.
FM briefs media ahead of GST council meeting.
India GST panel likely to recommend tax cuts on 20-25 products: Report
India's goods and services tax panel is likely to recommend tax cuts on 20-25 productsbut will avoid lowering rates for items that will significantly dent revenue collections, two government sources said.
The panel, comprising state finance ministers and the federal finance minister as the chair, will shortly meet to decide on reducing tax rates to boost growth that has fallen to a six-year low.
FADA urges GST Council to take definitive decision on GST rate for automobiles
Automobile dealers' body FADA on Thursday urged the GST Council to take a definitive decision on GST rate in its meeting scheduled to be held on Friday.
In a letter written to Finance Minister Nirmala Sitharaman, FADA President Ashish Harsharaj Kale said customers have deferred their buying decisions in anticipation of GST rate cut.
TaMo expects positive outcome from GST Council meeting
Tata Motors exuded confidence in the government taking a positive call on the auto industry's demand for a tax cut on vehicles at the GST Council meeting Friday.
"The auto industry can live with or without GST rate cut but an announcement (on whether the taxes are going to be lowered or not) is needed," said Guenter Butschek, managing director and chief executive of Tata Motors said.
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No stressed MSME loan to be declared NPA till March 2020: FM
The governmentasked banks not to declare any stressed loan account of MSMEs as NPA till March 2020 and work on recasting their debt.
At a press conference after meeting PSU bank heads, Finance Minister Nirmala Sitharaman said there already exists a circular from the Reserve Bank that provides for stressed loan accounts of MSMEs not being declared non-performing assets (NPAs).
PTI
Hero MotoCorp urges Govt for phased GST reduction, cut rates for 2-wheelers right away
Hero MotoCorp urged the government to consider a phase-wise reduction in GST on automobiles, cutting rates for two-wheelers in the first stage and deferring tax cut on four-wheelers to a later stage.
"I understand that potential adverse impact on government revenue is becoming a constraint (for GST rate cut). While increased sales should take care of that, even if we assume a shortfall in revenue, a resolution can be found if we approach this topic in phases," Hero MotoCorp CFO Niranjan Gupta said.
PTI
Govt mulling another booster dose to rejuvenate economy
The finance ministry is working on one more booster dose to give a leg-up to the economy that has hit over the six-year low of 5 per cent, a senior finance ministry official said.
The blueprint for the stimulus is ready and would be announced by Finance Minister Nirmala Sitharaman in the next few days, the official said without giving further details.
Mining industry to put forth grievances before Fin Min
People dependent on the mining industry in Goa are planning to put forth their grievances before Union Finance Minister Nirmala Sitharaman when she will chair the GST Council meet here on Friday.
Thousands of mining dependents will walk to the venue of the GST council meet on Friday to present their memorandum to Sitharaman, Goa Mining People's Front (GMPF) president Puti Gaonkar said.
FM Sitharaman hints at no GST rate cut on automobiles
Indicating that there may not be any tax cut on automobiles at the September 20 GST Council meeting, Finance Minister Nirmala Sitharaman Tuesday said the sector has enjoyed good times till about two years ago and the current problems are not totally related to high GST rates.
Boost for hotels but no help for wailing auto, biscuit
Ahead of the crucial GST Council meeting on Friday, a committee of officials have rejected demands for a cut in the tax rate on items ranging from biscuits to car owing to tight revenue position as any reduction will dent Centre and State collections.
GST Council meet to take call on tax rate cut on Friday
Amid clamour forratecutby various industries, the all-powerfulGSTCouncilwill hold a crucialmeetingonFridayto decide ontaxmoderation, keeping in mind the revenue position and the need to boost sagging economic growth.
TheGSTCouncil, headed by Union Finance Minister Nirmala Sitharaman and comprising representatives of all states and Union Territories (UTs), will have its 37thmeetingin Goa in the backdrop of economic growth hitting a six-year low of 5 per cent for the first quarter of the current fiscal.
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