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Competition brings out the best in any company and leads to innovation: Narayana Murthy

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Narayana Murthy Infosys (7)_0_0

By NewsGram Staff Writer

“Competition and regulation are the two mechanisms which can ensure that the “Invisible Hand” works to the advantage of the society,” said Infosys founder N.R. Narayana Murthy today during an event.

During the keynote address at the 6th Annual Day Lecture on ‘Creating a Better India – Musings on Economic Governance Ideas for India’ organised by the Competition Commission of India,  Murthy said that competition brings out the best in any company and leads to innovation, new ideas, services and products.

Referring to the role of regulation, Murthy advocated for swift and fearless regulatory decisions. He stressed that trust and confidence in the regulators are important to attract more and more entrepreneurs to start businesses.

Within such system, he indicated five roles which the government has to discharge viz. unanimity of conviction and integrity of belief among all political parties that solution to the problem of poverty is through elimination of friction to businesses and entrepreneurs and by creating more jobs; translating this conviction by speedy action to ensure growth of the economy and creation of better jobs; creating an independent and meritocratic judiciary with up-to-date technology, and knowledge of modern, global judicial practices and judgements; introducing transparent and stable taxation policy; and lastly using tax money wisely and efficiently to make life better for the poor by investing in education, healthcare, nutrition and shelter.

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Know About the Financial Impact of Abolishing DDT

Why was DDT abolished? How does it affect finance and business? Find out here?

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DDT budget
Earlier effective Dividend Distribution Tax (DDT)was 16.995 per cent on the dividend declared. Lifetime Stock

BY ASHOK SHAH

Earlier effective Dividend Distribution Tax (DDT)was 16.995 per cent on the dividend declared. The tax was then grossed up in Budget 2014 and the current effective DDT rate was 20.56 per cent on the dividend declared. Further resident (non-corporate) shareholders were liable for an additional tax at 10 per cent (plus applicable surcharge and cess) on dividend exceeding Rs 10 lakh. The effective tax rate for Individuals falling in highest tax slabs was 14.248 per cent.

In the Budget 2020, DDT in the hands of the company has been abolished and has been simultaneously substituted with a tax in the hands of the shareholders at applicable tax rate. Additional tax of 10 per cent also has been done away with. The companies declaring such dividend will have to now deduct tax at source (TDS) at 10 per cent on the amount distributed as dividend.

DDT budget
In the Budget 2020, DDT in the hands of the company has been abolished and has been simultaneously substituted with a tax in the hands of the shareholders at applicable tax rate. Wikimedia Commons

Small tax payers would definitely benefit as their effective rate of tax is much lower and would result in substantial saving. Impact on taxation of large retail investors may be negative, as dividend is expected to be taxable at the maximum slab rate in their hands. The effective tax rate for individuals falling in highest tax slabs is 42.74 per cent i.e. there will be an additional burden of 28.492 per cent.

Also Read- Fiscal Budget To Upscale FDI Inflow, Job Creation in Mobile Industry: Experts

However, this will promote foreign investment since the foreign investors would now claim benefit under the double tax treaty where the tax rates ranges from 5 to 15 per cent and the same will be available as credit in their home countries. This will result in direct saving of 20.56 per cent for these entities. (IANS)