Relief for Local Firms as Govt cuts Tax on Overseas Loans
TNI Bureau: Hours after the removal of additional taxes on non-subsidised LPG cylinders was announced, the UPA government doubled the cheers by cutting tax on overseas loans taken by local companies, which are struggling to rise in the market.
The move is a big step to boost the economy by inviting the companies to invest in the market. The government reduced the interest paid to overseas lenders by the companies, to 5% from the earlier 20%.
Finance Minister P Chidambaram said that the move was proposed in the budget session, but was approved on Friday.
The tax cut will be effective from July 2012 till June 2015. All types of overseas loans and long-term infrastructure bonds come under the proposal.
It is reported that the Cabinet will consider a proposal to increase the limit for FDI in local insurance companies under the reform policy.
The government might be struggling to remain in power after its key ally Trinamool Congress quit over the decision on diesel price hike, FDI in retail and cap on subsidised cylinders, but the BSE Sensex and Nifty rose significantly.
The Centre’s decision sparked widespread protests across country and the Opposition slammed the government saying the reforms will hurt the aam aadmi (common man), but the government stayed adamant saying it would boost the economy.