FM hits back at Cong’s tax bonanza jibe; lists corporate tax cut by Manmohan, Chidambaram

Finance Minister Nirmala Sitharaman today hit back at the Congress party’s criticism of the government’s decision to reduce the corporate tax rate in 2019. Sitharaman retorted to the Congress’s “tax bonanza” jibe to the corporate sector by the Modi government, listing the instances when the corporate tax rates were reduced during the Congress party rule in the past.

Hurling back the question to the opposition benches, Sitharaman asked whether the tax cuts by the Congress regime were a bonanza. Or was it a bonanza now when it's important to let businesses grow amid the legacy issues of 2014 like twin balance sheet problem and India getting clubbed into the fragile five. During the discussion on supplementary demand for grants on Monday, former FM P Chidambaram said the government has given ₹2.5-lakh crore tax bonanza to the corporate sector.

In her reply to a discussion on the supplementary demand for grants in the Rajya Sabha today, Sitharaman said, “I would like to highlight a few facts. In 1994, under Dr Manmohan Singh, the corporate tax was cut to 40% from the prevailing 45%. Then in 1997, then finance minister P Chidambaram brought the corporate tax rate down to 35% from 40% after also abolishing the surcharge.”

“Then, from 2000 onwards, surcharges were back, raising the corporate tax rate to 36–38%, which continued for the next five years after that. But then, it was Mr Chidambaram again who reduced the corporate tax to 30% in 2005. But along with the surcharge, the actual rate was 33%,” she said.

“Was it a bonanza at that time?” She asked, adding that it is not a bonanza right now. “When you reduce the corporate tax, and especially in a 2014-like situation amid getting the banks to be healthier, the economy in fragile five situations, and twin balance sheet problems, cutting down the tax was a measure to let businesses and manufacturing growth in India,” she said.