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Union Budget 2018: This Can Be Modi Govt's Answer To Your Unemployment Problem


Of the many concerns of the larger public base of India, employment generation is one amongst the most important. And to address the issue, in the last budget 2017, the Modi govt did touched upon the crucial corporate tax which currently stands highest of the many other countries @ statutory rate of 34.61%. In its budget three years ago, there was a sentiment of corporate tax being decreased to 25% but no action was taken.

Union Budget 2018: This Can Be Modi Govt's Answer To Your Unemployment Problem

Details on corporate tax and how it influences employment generation

A lay men would not be able to make out a relation between tax and employment generation. But yest, the corporate tax stance do impact employment generation to some degree if not to very high order.

What Is Corporate Tax?

Tax levied on the net income of the company is referred as corporate tax. For both private as well as public entities registered with the Companies Act 1956, the mandate of corporate tax holds true. For domestic companies, a tax @ 30% is payable. In addition the cess amount is charged depending on the income slab. Also, education cess on the tax and surcharge value @ 3% is payable.

Relief to small companies with turnover of upto Rs. 50 crore

The budget 2017 came as a relief to small businesses with turnover of upto Rs. 50 crore who were provided a relief as lower corporate tax rate of 25%.

Focus to be on labour-intensive areas as against capital intensive sectors

The less weightage given on until now to labour intensive areas and less supportive tax structure played havoc with investments and job opportunities at the same time.

Moderation of tax rate in global sphere mainly US to put pressure

To remain competitive as promised the govt would need to reduce the corporate tax rate to 28% if not 25% as promised over the four years time. The fact that US has brought about a tax overhaul with tax rate cuts is also expected to have a rub-off effect in other economies including India.


The Trump govt in its major revamp in the US tax code provided a permanent tax break to corporations

Fiscal deficit fallout has tightened the belt of Modi govt

The mounting crude oil bill and revenue loss due to lesser GST collection since the last two months time has made the govt to breach its deficit target of 3.2% of GDP and to make up for it, the country has revised its additional borrowing at Rs. 20000 crore.

Story first published: Wednesday, January 24, 2018, 8:07 [IST]
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