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Corporate sector celebrates the Diwali after the Modi Government's decisions

Sunday - September 22, 2019 10:05 am , Category : BUSINESS
Modi Government gives 'Sanjeevani' to the corporate sector in the economic slowdown
Modi Government gives 'Sanjeevani' to the corporate sector in the economic slowdown

Know what major changes to be seen after the relief given by the Modi Government to the corporate sector?

SEP 22 (WTN) - The corporate sector, which has been suffering from the recession due to the global economic slowdown, had been expecting a big relief from the Modi Government for a long time. Concerned by the deteriorating condition of the auto sector and the continuing slowdown in other industries and service sectors, the central government has given a big boost to the corporate sector before the Diwali in a period of recession. It is being said that due to this support, the corporate sector, which is suffering from the economic recession, has got a relief. What are the decisions of the Modi Government, due to which Diwali is being celebrated in the corporate sector before Diwali? Let us tell you in detail.

Modi Government has cut corporate income tax first by giving relief to corporate sector. After the new decision of the government, now the domestic companies will be charged 22% income tax without any exemption. At the same time, after adding surcharge and cess, the company will have to pay 25.17% tax. This decision of the government will benefit all those big companies which fall in the 30% corporate tax slab.

For your information, let you know that whatever companies earn, corporate tax is imposed on them. The scope of corporate tax includes private, limited or listed and all types of companies without a list. In any country, corporate tax is considered an important part of the government's revenue. According to experts, due to reduction in corporate tax, the government is expecting a revenue loss of Rs 1.45 lakh crore, but due to this tax reduction, the industries are currently getting a huge relief.

In order to provide relief in the economic downturn, the Central Government has also given relief to the companies in the Minimum Alternate Tax (MAT). After this decision of the government, now the companies will have to pay minimum alternative tax at the rate of 15% instead of the current 18.5%. For your information, let you know that the Minimum Internet Tax is levied on companies that earn profits, but due to concessions, the tax liability on them is less.

Foreign companies will benefit more by reducing the Minimum Alternate Tax rate from 18.5% to 15%. For your information, let us know that foreign companies reduce investment in India only because of the high Minimum Alternate Tax. If foreign companies invest more in India due to the reduction of this tax, it can easily meet the Modi Government's target of $ 5 trillion economy by 2025.

To give a boost to the slow economy, the Modi Government has also given relief to the domestic companies making new investments. After the government's decision, now the businessmen who set up a manufacturing company after October 1, 2019 will have to pay income tax at the rate of 15%. After taking all kinds of surcharges and cess, the tax rate will be 17.10%. For your information, let you know that at this time new investors have to pay tax at the rate of 25%.

According to the experts, this decision of the government can give support and momentum to the Modi Government's dream project ‘Make in India’. After this decision of the government, businesses will now focus on new companies, which can also give a boost to the sluggish ‘Start-Up’ plan. If new companies open up and startups gain momentum, then this will increase employment opportunities. However, the domestic companies, which will start their production after 31 March 2023, will not get the benefit of this decision of the government.

At the same time, the government has also given relief to the investors investing in the stock market. Modi Government has announced the removal of surcharge on capital gains, giving relief to investors. For your information, let us know that in the first full budget of the second term of the Modi Government, foreign and domestic investors were shocked, in which long-term capital gains surcharge was increased on the investment in the stock market.

This decision of the government will provide relief to those who sell shares or invest in equity mutual funds. For your information, let us know that when an investor sells shares or mutual funds, then he makes a profit in the unit. This profit is called capital gain and the government levies surcharge on it.

At the same time, the Modi Government has also announced exemption from buyback tax on the listed companies that announced share buybacks before 5 July 2019. For your information, let us know that the most benefit of this decision of the government will be to those companies which do share buybacks. You might want to know what the share buyback. So for your information, let us know that when a company buys its own shares from investors, it is called buyback.

These shares cease to exist after the buyback process is completed. Usually there is excess cash in the companies' balance sheets, only then the companies insist on buyback. It is not considered good for any company to have too much cash. Having more cash means that the company is not able to use its cash. This is why the company uses its surplus cash through buybacks.

After these ‘gifts’ given to the corporate sector by the Modi Government, the stock market looked green. While the SENSEX strengthened by over 2200 points, the Nifty recorded an increase of over 600 points. Due to this upheaval in the stock market, investors have made a profit of more than 7 lakh crores during the business. It is being said that in the coming days, these decisions of the Modi Government will see even more impact and companies struggling with economic slowdown will soon be able to recover themselves.