Complimenting Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman for giving an invaluable gift to the corporate world ahead of Diwali, Chief Minister Yogi Adityanath said that slashing corporate tax rate would result in more investment by corporates, higher growth, more jobs, higher productivity and higher income.
“It is a historic step taken by the Central government to strengthen Indian economy that will help the country compete at global level,” Yogi Adityanath said while addressing reporters here on Sunday.
He said that at a time when the entire country is facing economic slowdown, the decision taken by the Union Finance Ministry to cut corporate tax was historic. “The businesses facing recession will be revived. Lowering of tax rate due to trade war between China and America will benefit the country in general and Uttar Pradesh in particular. Due to this decision, better results will be witnessed in the state’s revenue and gross domestic product (GDP),” he said.
The Chief Minister said that the current tax rate had reduced India’s tax rate to the lowest among all countries of South East Asia and South Asia. “Prioritising market sentiments is the biggest historical decision taken in independent India. There has been an unprecedented increase in India’s market cap — from Rs 138 lakh crore to Rs 145 lakh crore. This is the biggest jump of Rs 7 lakh crore,” Yogi said, adding that the cut in tax rate would benefit the automobile and other sectors the most.
“We have brought investment policy for 21 sectors in Uttar Pradesh. This initiative of the Union Finance Ministry will enable India to become a $ 5-trillion economy and Uttar Pradesh a 1-trillion economy. Due to the lowest tax rate in the whole of Asia, the entrepreneurs here will be able to export their goods easily,” the Chief Minister said.
He said that companies now had the option to pay tax at the rate of 22 per cent instead of 30 per cent, and by including the surcharge and cess, the effective rate would be 25.17 per cent.
“For new manufacturing companies, the effective rate, including all surpluses and cess, would be 17.01 per cent,” he added.
The Chief Minister said the current cut in corporate tax would have a positive impact on the destitute and the unemployed.
“This money will either be distributed as dividends or invested further. A large part will flow into our economy in the form of investments,” he said.
Yogi said that according to quality control and supply chain auditors, QIMA (Quality Inspection and management), the institutional investors are dislocating their industries from China because of increased custom tariff due to the trade sanctions imposed by the US.
“As a result, 80 per cent of American supply chain companies and 67 per cent of European companies have been shifted from China. The increase in the wages of workers in China has resulted in an increase in the cost of production. We will attract them for increasing investment in India,” he said.
The Chief Minister said these companies would now come to India as tax rates had been lowered here. He said capital investment would take place in the form of new projects and manufacturing units would open in the entire country. “This will further generate jobs and benefit the overall economy,” he added.
Yogi said that the merger of 10 public sector banks and creation of four banks had reduced the number of banks to 12 which was 27 in 2017.
The Chief Minister said that the government would provide Rs 70,000 crore in advance to public sector banks to release Rs 5 lakh crore of liquidity in the market, which would benefit corporate, retail borrowers, MSMEs (micro, small and medium entrepreneurs and small traders.
Yogi said that the National Housing Bank (NHB) had increased the sum of additional cash assistance to National Housing Finance Company (NHFC) from of Rs 20,000 crore to Rs 30,000 crore. He said an additional Rs 36,000 crore to Rs 68,000 crore would be released for export credit under priority sector.
The Chief Minister said that a special window would be created to help stalled housing projects that fall under affordable and middle class housing projects category. He said a separate fund would be created to which the government would contribute Rs 10,000 crore.
Yogi said the hotel and warehousing industries would benefit from the revision in the goods and services tax (GST) rates due to which five lakh traders would get rebate in filing tax returns.
The Chief Minister said that due to reduction in corporate tax, 20 per cent of incremental foreign direct investment (FDI) was likely to flow into Uttar Pradesh. He said by making skill development employment-oriented, direct and indirect employment would be provided to 20 lakh people every year in various industries.
According to the strategy to facilitate the opportunities arising in Uttar Pradesh, suitable land banks will be made available for the industries. For this, land of sick state public sector undertakings (PSUs) will be used in addition to the areas notified by industrial development authorities.
