Govt proposes to slash corporate tax rates to 25.17 pc
New Delhi, Sep 20: In a major fiscal booster,, Finance Minister Nirmala Sitharaman on Friday said that government has proposed to slash the corporate tax rates for domestic companies and for new domestic manufacturing companies.
Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
Sitharaman said,''We today propose to slash the corporate tax rates for domestic companies and for new domestic manufacturing companies. Corporate tax rate to be 22% without exemptions. Effective tax rate to be after surcharge to be 25.''
''To boost Make in India, another insertion inserted to Income Tax Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing an option to pay income tax at rate of 15%,'' she said.
The Finance Minister said,''To promote growth, a new provision has been inserted in the income tax act with effect from fiscal year 2019-20, which allows any domestic company to pay income tax at the rate of 22% subject to condition they will not avail any incentive or exemptions.''
''To provide relief to companies which continue to avail incentive or exemptions, even for them we are giving a Minimum Alternate Tax(MAT) relief, the MAT rate has been reduced to 15% from the existing 18.5%,'' Finance Minister added.
''In order to stablise the flow of funds into the capital market, it is provided that enhanced surcharge introduced in Budget of July 2019 shall not apply on capital gains arising on sale of equity share in a company or a unit of a equity oriented fund,'' she further said.
The enhanced surcharge shall not apply on capital gains arising on sale of any security including derivatives in the hands of foreign portfolio investors.
''The GST Council meeting will be keenly watched by India Inc as its outcome could prove to be a deciding factor in charting the direction of the economy. The effective tax rate for these companies shall be 25.17 % inclusive of all surcharge and cess,'' Sitharaman said.
On September 19, Finance Minister Nirmala Sitharaman, who has since her maiden Budget on July 5 announced measures in three tranches for boosting the economy, held a meeting with heads of public sector banks (PSBs) to review liquidity or money flow in the system and transmission of lower benchmark interest rates to borrowers.