Corporate Tax Cut – Expected To Bring Back Economy on Growth & would FII start buying Indian EQUITIES??

🔷️On friday after announcement of Historic move to Cut corporate Tax Sensex had second Best UPMOVE in terms of Rise in last 11 years.

🔷️Last time Sensex rose 17.3% or 2111 points on 18th May 2009 and on 20th Sept’19 It rose 1921 points or 5.3% rise in sensex

🔷️FIIs have bought only ₹35.78 crores on 20th Sept 2019.It’s DII who had a buying with full force as there were sitting with larger tranche of cash pile to be invtested in equities.They bought almost 3000cr.

🔷️Need to watch how going forward Global spirits are enthused with India Growth story or not?
Would FII only buy select Largecap names or there would be Huge buying also in Quality midcap names where there seems value and future growth

CORPORATE TAX CUT :

1️⃣ Corporate tax rate slashed to 22% from 30% .Effective tax rate for companies to be 25.7% including surcharge and CESS | Such companies not require to pay MAT

2️⃣ MAT relief for compansies staying in current Regime – New Manufacturing Co on or before from 1st Oct 2019 and where production starts before 31st Mar 2023 tax rate slashed to 15%

Effective tax rate would be 17.01% (including Surcharge & Tax) No MAT required to be paid.

3️⃣ Companies not wanting to opt for option 1 or 2 can continue within the existing Tax Regime. Post expiry of the current regime they can choose one of the above and will have to stick to the same.

PUSH FOR CAPITAL MARKETS :

🚩 Enhanced surcharge introduced in July 2019 shall not apply to Capital Gains on sale of equity share which is subject to STT

🚩 Enhanced surcharge introduced in July 2019 shall not apply to Capital Gains on Derivatives

🚩No Tax On Buybacks Announced Before Budget – BUYBACK gets grandfather: Relief for listed companies that have made an announcement for buyback before July 5, tax on buyback of share shall not be charge.

🚩Expand the scope of CSR 2% spending across various other means.CSR fund made available for Incugators,universities and Research bodies.

🚩TOTAL REVENUE FOREGONE FOR THE REDUCTION OF CORPORATION TAX IS RS 1.45 TRILLION PER YEAR

🚩Expecting Big positive in the market after a cut in corporate tax Rate cut

🚩Brakes on SLOWDOWN

🚩Revival of consumption

🚩Improved sentiments pickup in investments

🚩More competitive corporate sector may boost exports going forward

🚩There would be Job push as EXPECTED investment to create more jobs & Rise in demand from fiscal boost May spur companies to hire more jobs in future

FISCAL WORRIES :

1️⃣Fiscal deficit double hit almost 4% of GDP

2️⃣Government needs to borrow more to meet fiscal deficit

3️⃣If spending is cut public investment growth can suffer going forward

Disc- All views expressed are personal and only for Educational and study purpose. Consult your financial advisor before investing or taking any position based on above article.

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