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Is this Budget A Step Towards India's March to the Rs 5 Trillion Mark?
Jul 11, 2019

If there are two things most discussed right now in India, it must be cricket and budget.

The post-budget reaction saw a negative reaction from the market.

There was also debate around the tax for the super-rich which was increased. Also, for the market, buybacks will now be taxable which was also a surprise.

Before any for or against argument against the tax, it is important to understand how government earns its revenue.

Corporate taxes contribute the major chunk to India's revenues. This is followed by borrowings and GST.

Non-tax revenues currently contribute to 9% of overall revenues. Non-tax revenues include dividends that the government receives from PSUs or any other divestment that it does.

Focus on economic growth will mean revenue from corporate taxes will be an automatic by-product.

The modi government has reduced corporate tax rates to 25% for firms with turnover up to Rs 4 billion. We believe many such measures are needed for India to become a Rs 5 trillion economy in the next 5 years.

Data Source: Press Information Bureau, India

This Chart Of The Day was published in The 5 Minute WrapUp - What the Cricket World Cup and Tanushree's Top 7 Stocks Have in Common

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