How Nirmala Sitharaman's historic corporate tax rate cut is going to affect the common people


Economy around the world has received a severe blow during the recent times due to several significant changes on the face of human activity on the earth. As a result, a slowing down of global economy and Indian economy have become the hottest topics ever in the social media and news channels. The BJP led NDA government has assumed its power over the central government for the second consecutive term and this sign is considered a setback that ruled the country over the last term also.

Corporate income tax rates have been slashed

Amidst this background, the Finance Minister Nirmala Sitharaman made a historical announcement today as a festival bonanza that has brought cheers to the Indian masses. This announcement declared a cut in corporate tax for the domestic companies in India which is expected to benefit more than 7 lakh companies in the country. These companies are now paying a hefty tax rate of 30% over their income. Over 1.3 lakh companies in the manufacturing sector are now paying a tax rate of 27.8 percent and the respite announced for these companies is slightly lower, but brings a considerable benefit.


The cut in corporate tax

The Finance Minister’s announcement regarding the corporate tax rate cut has several dimensions. The corporate income tax rate has been reduced for all companies from 30% to 22%. When added with the surcharge and education cess, this will work out to 25.17 percent coming down from an alarming 34.94 percent. However, this benefit can be claimed only if the company has not availed of any tax incentives or exemptions. Companies in different sectors will get the benefit from the said announcement in different measures.

How experts say the corporate tax cut will impact the general public in India

The present corporate income tax rate cut announcement by the government of India during a crucial time of slowdown in the economy is considered as a highly significant announcement. Some experts say this is not a zero-sum game. The present move will help increase the cash flow for the firms in the country and give way to more investments by them. In turn, the companies will come forward to pass on the benefits they received tot eh customers much ahead of the upcoming festival season in India.


Some economists say that the present corporate tax rate cut is undoubtedly the best way and the quickest method to boost up the consumption by the general public. Over the recent past, a severe fall in the consumption of goods across some important sectors was considered one of the major factors that led to the economic slowdown. The present rate cut will invariably show its impact on government finances too. Nevertheless, the government is keen that growth is its top priority given the present circumstances.

There will be a sense of relief across different markets and the prices of goods across several sectors will come down very soon. While the government might face a loss from tax revenues, the higher tax revenues due to more consumption can help compensate for the loss. Maybe time will tell if there could be any reduction in the interest rates which might affect the interests of the investors. Much of the benefits to the general public due to the present tax rate cut is obvious, but we need to wait and see the results.