The reduction in the corporate tax expected to boost the liquidity of developers

The government’s decision to reduce the corporate tax to 22% came as a surprise package for the developers. This initiative by the government is anticipated to boost the growth of the other key segments like warehousing, offices and industrial real estate. This cut in the corporate tax will give developers an opportunity to reduce the property prices that will eventually boost the sales for the developers during the festive season. This move is intended to revive the growth in the Indian real estate sector and encourage the property seekers to re thing about investing in the real estate sector. 

The commercial sector is likely to get a major benefit from this government’s initiative but at the same time, it will also propel the growth in the residential sector as well. With the slow demand for the residential properties resulting in pilling up of unsold inventory will now act as a catalyst for the developers to reduce the piled-up inventory and bolster their sales. This game-changer announcement will not only benefit the real estate sector but at the same is likely to benefit the other sectors as well. It is anticipated to have a rippling effect on the real estate sector that will also encourage foreign institutional investments. 

Moreover, the falling private investment which was pulling down the Indian economy is likely to help in starting fresh investments and uplift the Indian economy. It will also encourage in promoting the industrial production but at the same time achieve the make in India motive launched by the prime minister Mr. Modi. Wealth Clinic CMD, Mr Amit Raheja avers, the corporate tax cut rate was much-needed relief for the developers that are facing the liquidity crunch. 

Here are some of the key announcements made by the government:

• The corporate tax rate levied after the surcharge will be 25.17%
• The local companies that were incorporated after October and whose projects are commissioned before March 31, 2023, are liable to pay the tax at 15% 
• The tax rate for the new companies including the cess and surcharge will be 17.01%
• The minimum alternative tax will be 15% for companies that avail themselves of exemptions and the incentives. 

This corporate tax cut rate is a good move that will not only help in the revival of the economy but also encourage more investments in the real estate market.