Earlier today, the Indian Finance Minister (FM) presented the
1st Budget of the newly formed government for financial year (FY)
2019-20. While there were many expectations before the Budget to
revive animal spirits in the economy, the Budget has presented a
mixed bag. The focus of the Budget was on the rural economy and
Make in India, while limited proposals appear to have been made to
increase disposable income and increase consumption.
At the outset, while the FM has not changed corporate tax rates,
the Budget proposes to extend the reduced corporate tax rates of
25% for Indian companies whose turnover is less than INR 4 billion,
which would cover almost 99.3% of domestic companies. However, for
individuals falling in the rich and super-rich category, the Budget
proposes a higher surcharge on income tax resulting in the highest
effective tax rate of between 38-42%. Increasing taxes through
surcharges is not an appropriate way of increasing taxes,
especially when
