Corporate tax rates slashed as govt announces ₹1.45 lakh crore stimulus
1 min read 20 Sep 2019, 10:46 AM ISTOrdinance for slashing corporate tax rate already passedIt will cost the govt ₹1.45 lakh crore
PremiumNEW DELHI : Finance Minister Nirmala Sitharaman today announced a big reduction in income tax rate for corporates. The government has slashed basic corporate tax rate to 22% from 30% while for new manufacturing companies it has been cut down to 15% from 25%. Over the past few weeks, the government has been announcing a series of measures to boost growth that had fallen to six-year low of 5% in June quarter. Revenue foregone for the reduction in corporate tax rate and other relief measures announced today will cost the government ₹1.45 lakh crore per year, the finance minister said.
Here are some of the key announcements:
Govt proposes to slash corporate tax rate for domestic tax rate
Ordinance regarding this has already been passed
A domestic company can pay income tax at 22% if they don't seek any exemption or incentives
Effective Tax Rate 25.17% inclusive of all surcharges and cess for such domestic companies
Such companies also not required to pay Minimum Alternative Tax
Companies availing exemptions can opt to pay tax of 22% after the exemption period is over
Enhanced surcharge announced in Budget shall not apply on capital gains arising on sale of any securities including derivatives in the hands of foreign portfolio investors
The govt expects to widen tax basket with lower tax rate
Buybacks pre-July 5 exempted from buyback tax
For new manufacturing companies that start production before March 2023 and incorporated on or after 1st October 2019, corporate tax rate brought down to 15% from 25%
Enhanced surcharge announced in Budget not to apply on capital gains arising on sale of equity share in a company or a unit of an equity oriented fund or a unit of a business trust liable for STT
MAT for companies that want to use tax exemptions cut to 15% from 18.5%
New tax rate will be applicable from the current fiscal which began on April 1.
Companies can opt for lower tax rate after expiry of tax holidays and concessions that they are availing now
