 "Sitharaman has said she is expecting improved compliance after the tax cut and that it would help her stick to the fiscal deficit target")
The big question that has arisen after Finance Minister Nirmala Sitharaman’s corporation tax rate cut decision last Friday is what its actual impact would be on the government’s fiscal situation. On Friday, Sitharaman said the measures (see table) would result in forgone revenues worth Rs 1.45 trillion.
This was a huge amount — almost 19 per cent of the total corporation tax the government was to collect during the current year. This would have also meant a widening of the fiscal deficit by about 0.7 per cent of gross domestic product (GDP). In other words, the government’s fiscal deficit would
