Economists have been suggesting bold steps in order to improve tax revenues while remaining competitive. The move to reduce corporate taxes by Modi government is surely commendable. The reduction in corporate taxes can also bring in more investments for Indian manufacturing sector.

While Indian Media has termed almost every move of Prime Minister Narendra Modi as masterstroke, this one actually seems like a masterstroke. Many market participants were expecting the government to lower the taxes. It has come with little delay but this move will have a major impact on Indian economy. The government should reduce tax rates but should improve tax compliance.

Comments on the government's decision by Ajay Piramal, Chairman, Piramal Group....

The announcement made by the Finance Minister today is commendable. With this the Government has signalled that it is listening to the Industry and is willing to embrace it as a partner for progress of the Country. We are certain that this Big Bang reform will kickstart the economy. Surplus funds available to companies will be invested in capex and talent. The NBFC sector will save between Rs. 250 - 300 crore that can potentially be redeployed as loans. In a climate of global slowdown, this reform will make India an attractive destination for FIIs and long term investors. The announcement has brought parity to India’s corporate tax rate compared to that of advanced markets thus making it very competitive.