 Achieving One Trillion Dollar Economy for Tamil Nadu: Some Implications and ConcernsC. Rangarajan and
K.R. Shanmugam
Working Papers from Madras School of Economics,Chennai,India Abstract: This study is an attempt to empirically analyse the effect of corporate income tax on investment of manufacturing firms in India during 2005-2019, using the standard panel two way fixed effects model estimation techniques. It is found that the effective corporate tax has a negative and significant impact on the corporate investment. Moreover, the estimated effective tax elasticity is relatively low as compared to the magnitude found in other countries. Our analysis also indicates that the deduction rate has a positive impact on investment while interest-debt ratio and leverage ratio have a negative impact. The effective rate increases with age and size of firms. It is our hope that these results will be useful to policymakers and other stakeholders to take appropriate strategies to design the corporate tax policy such that it will not hinder business investment in India. Keywords: Economic growth; exchange rate movement; incremental capital output ratio; sustainable threshold debt (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mad:wpaper:2022-232 Access Statistics for this paper More papers in Working Papers from Madras School of Economics,Chennai,India Contact information at EDIRC. |
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