Corporate tax slashed to boost economy, sends Sensex soaring
Corporate tax slashed to boost economy, sends
New Delhi: "Finance minister Nirmala Sitharaman on
Friday, 20th September 2019 slashed corporate tax rates for domestic
firms from 30% to 22% and for new manufacturing companies from 25% to 15% to
boost economic growth.
The slew of tax concessions
will be applicable from April 1 and any advance tax paid by the companies will
be adjusted accordingly. The measures will have a revenue implication of Rs
1.45 lakh crore annually, Sitharaman said.
order to promote growth and investment, a new provision has been inserted in theIncome-Tax Actwith
effect from FY 2019-20 which allows any domestic company an option to pay
income-tax at the rate of 22% subject to the condition that they will not avail
any exemption/incentive. The effective tax rate for these companies shall be
25.17% inclusive of surcharge and cess. Also, such companies shall not be
required to pay Minimum Alternate Tax (MAT),” finance minister said.
order to attract fresh investment in manufacturing and boost to ‘Make-in-India’ initiative
of the government, another new provision allows any new domestic manufacturing
company incorporated after 1 October to pay income-tax at 15%, she said.
“This benefit is available
to companies which do not avail any exemption/incentive and commences their
production on or before 31 March, 2023. The effective tax rate for these
companies shall be 17.01% inclusive of surcharge and cess. Also, such companies
shall not be required to pay Minimum Alternate Tax,” she added.
Sitharaman said the
companies have option to opt for the new taxation system or remain take
benefits under the existing taxation regime. “A company which does not opt for
the concessional tax regime and avails the tax exemption/incentive shall
continue to pay tax at the pre-amended rate,” she said.