Congress, on Monday night, called out two of the major happenings in India in a single tweet. They targeted Prime Minister Narendra Modi’s extravagant reception and people’s massive show of strength at NRG Stadium in Houston, Texas. They made a mockery of the event by giving it a political spin and targeted the economic slowdown in the country by tweeting the hashtag, #HowdyMandi from their official Twitter handle. They also called out the recent decision of the government of reducing corporate tax as 'meaningless'.
Without reforms across the board the Corporate Tax Cuts alone are meaningless, they will not lead to corporate expansion or foreign investors but instead further increase our fiscal deficit & revenue gap. #HowdyMandi pic.twitter.com/FXKX0FAxvZ— Congress (@INCIndia) September 22, 2019
Congress in their tweet said that the new reduced corporate tax will increase our fiscal deficit and revenue gap. They posted a series of eight tweets with the hashtag of #HowdyMandi to find loopholes in the new economic policies. The government has announced a slew of measures in the past few days to tackle the economic slowdown and boost the economy. In a bid to do so, they are receiving surplus funds from the central and they have recently slashed the corporate tax by 10% points. Congress to this, however, said that with land, labour, port and GST reform the tax reduction remains meaningless.
Amid Congress calling out the increase in fiscal deficit and revenue gap because of reduction in corporate tax, the Finance Minister, Nirmala Sitharaman has said that there are no plans to revise fiscal deficit target at the moment. She also said that these are the 'decisions taken near the Budget'. According to global rating agency Moody's, the corporate tax slash and the money transfer to the central government from RBI is only equivalent to around 0.3% of GDP in the current fiscal year. This further narrows the fiscal room for manoeuvre. However, Moody’s described the rate reduction as credit positive for companies because it will enable them to generate higher post-tax incomes.
Finance Minister, Nirmala Sitharaman, in an announcement at Goa, slashed corporate tax and informed that the subsequent foregone revenue will amount to Rs 1.45 lakh crore annually. Nirmala Sitharaman reduced the corporate tax by almost 10% points to 25.17%. She added that the reduction in tax rates has been done by promulgating an ordinance to an amendment to the Income Tax Act. The effective tax rate has come up to be 25.17% after considering surcharges and cess, this compares to a 30% corporate tax rate currently and an effective tax rate of 34.94%.