From Diwali Bonanza to Big Bang Reform: How Companies Reacted to Corporate Tax Cut Move

Indian companies were in for a surprise when Finance Minister Nirmala Sitharaman on Friday slashed the effective corporate tax for domestic companies from 30% to 25.17%, inclusive of all cess and surcharges. The move, effective from April 1 2020, is subject to the condition that companies will not avail any other incentive or exemptions.

The government’s decision is expected to boost growth and investor sentiment. The stock markets are already cheering the development, with the Sensex and Nifty advancing nearly 5%, their biggest single-day gain in a decade. Here’s a look at how leading companies and their heads are describing the government’s latest move:

Keki Mistry, VC and CEO, HDFC: “More foreign money will come in with a cut in corporate rates, profits will improve.”

S. Subramaniam, CFO at Titan: “Moves by the government can be called Diwali, cut in tax will go to earnings straight away. We will save 4% from rate cuts, effective tax rate is 29%, will pass on benefits to consumers.”

Kiran Mazumdar Shaw, CMD, Biocon: “Today’s move by the government most wanted and most required, this is a timely and right move and will bring back investor sentiment.”

Uday Kotak, CEO, Kotak Mahindra Bank: “Reducing corporate tax rate to 25% is big bang reform. Allows Indian companies to compete with lower tax jurisdictions like the US. It signals that our government is committed to economic growth and supports legitimate tax abiding companies. A bold, progressive step forward.”

Samir Arora, founder of Helios Capital: This is not bigger than budget, this is bigger than last 20 budgets.

Ajay Piramal, Chairman, Piramal Group: “The announcements made today by FM Sitharaman will kickstart the economy.”

Nilesh Shah of Envision Cap: “Moves announced by the government extremely positive. Will boost company’s earnings hereon. It’s time to Buy companies paying higher tax rates.”

Manish Chokhani, Director, Enam Holdings: “This is how a new economic cycle gets kick-started, bring back profits and animal spirits get ignited.”

Rajat Rajgarhia, Managing Director and CEO, Motilal Oswal Financial Services: “Most private banks would be immediate beneficiaries of the tax cuts announced day.”