Corporate Tax Cut: What Are the Dos & Don’ts for Small Investors?

Video Editor: Mohd Ibrahim
Video Producer: Shohini Bose & Kanishk Dangi

Finance Minister Nirmala Sitharaman, while addressing a press conference on Friday, 20 September, announced that corporate taxes have been slashed from 30 percent to 22 percent. After adding cess and other taxes, the new corporate tax will amount to 25.17 percent.

Speaking exclusively to The Quint, investment advisor Sharmila Joshi threw light on the market outlook in the days following the corporate tax cut and over what small investors must do.

Calling it a ‘mood changer’ for the market, Sharmila Joshi applauded the government’s decision to slash corporate tax. “CEOs of several companies and investors were upset with the economic slowdown since the last two months. They were looking up to the government to control the situation. The government has now taken some bold steps,” said Joshi.

She added that investors should be cautious, as the government’s move to slash corporate tax is a long-term decision and will not have immediate outcomes, therefore, consumers will not have immediate benefit. 

Joshi advised that small investors must still invest in bigger companies. This decision is going to be especially beneficial for the banking sector. “Investors must stay with private banks like HDFC, where quality is taken care of, where there are no NPAs. Plus one must maintain an SIP approach,” she advised.

What will be the market outlook in the coming days?

Bigger companies will get bigger benefits from the tax cut. Companies which do not have any liabilities can start a new business with new investment. That way they can get greater benefits and reach new levels. We can see this happening in the coming one year. Also, following the big step that the government has taken, we can see bigger investments in the market. Clearly, if you are setting up a new unit, you will get a tax reduction of 15 percent. So, this will benefit all sectors.

What are the dos and don’ts for small investors?

Small investors must invest in bigger brands and companies, especially in private banks where there are no NPAs. Plus, cement companies are a good option for investing too.