Finance Act: How the Government Plans to Tackle Economic Challenges Through Fiscal Policy

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The Finance Act is an important fiscal policy tool that the government uses to tackle economic challenges. It is a law that amends the existing tax laws and includes new measures to deal with economic issues.

The government has been actively using the Finance Act to tackle the economic challenges faced by the country. The latest Finance Act, 2019 introduced a number of measures to encourage investment, stimulate economic growth and create jobs. The Finance Act, 2020 contains a number of measures to help businesses that are struggling due to the COVID-19 pandemic.

One of the key measures introduced in the Finance Act, 2020 is the reduction in corporate tax rates. The rate has been reduced from 30% to 22% for domestic companies and from 25% to 15% for new domestic manufacturing companies. This is expected to encourage investment and create jobs.

Another important measure introduced in the Finance Act, 2020 is the introduction of the Vivad se Vishwas scheme. This scheme allows taxpayers to settle their tax disputes with the government by paying only the disputed tax amount, without any penalty or interest. This is expected to reduce the burden of pending tax disputes on the government and provide relief to taxpayers.

The Finance Act, 2020 also includes measures to support the non-banking financial sector, which has been hit hard by the COVID-19 pandemic. The government has announced a partial guarantee scheme for non-convertible debentures (NCDs) issued by non-banking financial companies (NBFCs) and housing finance companies (HFCs). This is expected to boost investor confidence and provide liquidity to NBFCs and HFCs.

The government has also announced a number of measures to promote digital payments and boost the digital economy. These measures include the imposition of a TDS (Tax Deducted at Source) on e-commerce transactions, which is expected to encourage small businesses to move towards digital payments.

In addition to the measures introduced in the Finance Act, the government has also been taking steps to promote economic growth and create jobs. The government has announced a number of infrastructure projects, including the construction of new highways, airports and railways. These projects are expected to create jobs and stimulate economic growth.

Overall, the Finance Act is an important tool that the government uses to tackle economic challenges. The latest Finance Act, 2020 contains a number of measures to support businesses, promote investment and create jobs. With the government’s continued efforts, the economy is expected to make a quick recovery from the impact of the COVID-19 pandemic.
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