The total revenue foregone on account of reduction in the corporate tax rate and other relief is to the tune of Rs 1.45 lakh crore.
After announcing corporate tax rates to boost a slowing economy, a move that is to cost the exchequer Rs 1.45 lakh crore, Finance Minister Nirmala Sitharaman on Sunday said the government has no immediate intention to revise its disinvestment and deficit targets.
Speaking to reporters an informal interaction at her residence in New Delhi, Ms Sitharaman said consultation process with different sectors began after Prime Minister Narendra Modi's Independence Day speech and the first phase of the announcement on August 23 was based on those talks.
In the latest announcement on Friday, Sitharaman said the government has decided to reduce the corporate tax rates to 25.17%, inclusive of all surcharges and taxes. For the new manufacturing firms, the tax has been slashed to 17.01%.
When asked if she expects the tax cut benefits will be passed on to consumers by the companies, she said, "Tax cut will be passed or not will be decided by the board of the company. How can I dictate them to pass it on to the consumer?"
Amid concerns that the tax cut may affect the government's fiscal deficit target, she said, "No target will be revised, not even disinvestment. It will be relooked at a proper time."
As and when I am ready I will take the decision, nothing pending as of now, she said.
The total revenue foregone on account of reduction in the corporate tax rate and other relief is to the tune of Rs 1.45 lakh crore.
Sitharaman said many foreign companies want to set shop in India as no one else is offering corporate tax as low as us.
"At the moment I am only focusing on what is announced. Post my announcement I spoke to a few people to get a reasonably well response. While President Donald Trump is asking companies to come back to the US and set up industry there, it is not viable for them. Now that one consideration (high rate of corporate tax) on what India was rejected will not hold true anymore," she said.
"No country in South East Asia is giving 15% tax rate. India has become an attractive destination for companies to relocate supply chains from China," Sitharaman said.
She added that the companies like Apple and their entire ecosystem will benefit as India will be more interesting to them than China.
Speaking on alleged harassment of taxpayers by authorities, she said that tax officials have been told not to harass anyone as the target given is not very high.
Expanding on her announcement of 'loan melas', the Finance Minister said all loans will be given as per criteria. Everything is going as per RBI guideline, she said.
In a move aimed at boosting credit flow to small and medium-sized enterprises (SMEs), the government earlier this week asked banks to hold loan melas in 400 districts.
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