Reducing the corporate tax rate has increased the profitability of the corporate sector. However, the demand side needs to be addressed as well by increasing the disposable income of consumers. The basic exemption limit should be increased to Rs 10 lakh to spur demand, which in turn can take the economy into a virtuous cycle of higher capacity utilisation, more investments, more jobs and higher consumption. The overall benefits are far more likely to outweigh the short term revenue loss on income...
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