Tax cut a big boost to economy: India Inc

New Delhi: The government's decision to slash corporate tax rate for companies will boost investors sentiments, encourage manufacturing and awaken animal spirits in the economy, as per India Inc

CII President Vikram Kirloskar said the cut in corporate tax from 30 per cent to 22 per cent without exemptions has been a long standing demand of industry and is an unprecedented and bold move by the government.

"The Finance Minister's mega corporate tax stimulus is a major move to boost investors sentiments, encourage manufacturing and awaken animal spirits in the economy," he said in a statement.

This move also indicates that the government is adopting a tax stimulus route rather than using higher government spending route to help the recovery process of the economy, Kirloskar added.

"Coming just ahead of the festive season, there could not have been a better news as the entire country gets ready to celebrate," he said.

Finance Minister Nirmala Sitharaman in Panaji on Friday slashed the 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.

Sharing similar views, Ficci said that these announcements will give a major boost to the "animal spirits" of corporate India and will reinvigorate the manufacturing sector that has been going through a difficult phase of late.

With the kind of corporate tax rate cuts announced, India now becomes a competitive market in the region with our rates similar to those prevailing in the ASEAN countries, it added.

Ficci is sure that this trigger will lead to a virtuous cycle of investments, growth and higher employment, the industry body said.