Tax cuts to boost industry; now need to focus on spurring demand: India Inc

Industry leaders from diverse sectors such as manufacturing and services expect the reduction in corporate tax rates to create a positive impact on the economy, leading to a speedier turnaround.

Last Friday, the government announced a massive 10-12 percentage points reduction in taxes for corporates, bringing down the effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies. The new tax rate will be applicable from April 1, involving a revenue loss of Rs 1.45 lakh crore this fiscal.

Welcoming the step, Godrej Group Chairman Adi Godrej said, "This great announcement will totally change the economic progress. I would say the only other announcement which is of greater importance was in July 1991. This tax cuts will have tremendous positive effect. We will soon see a turnaround."
Niranjan Hiranandani of realty major Hiranandani Group said the tax cuts address only the supply-side economics but we also need "to address the demand side."