Here's what India can learn about tax cuts from the American experience

Finance Minister Nirmala Sitharaman is betting that local firms will pass on the corporate tax cuts to customers in the form of lower prices to stimulate demand

India’s decision to cut corporate taxes may benefit from lessons learned in the United States.

A recent study suggests that the rise in US business investment since the passage of the Tax Cuts and Jobs Act in late 2017 isn’t necessarily due to the cut in the corporate tax rate from 35 per cent to 21 per cent, which aimed to lower the cost of capital. The paper published by the International Monetary Fund puts forth a simpler reason: investment has been rising because domestic demand was boosted by lower personal taxes and higher government spending.