Modi government gives a big relief to India corporate sector by slashing down income tax rate by 22% from 30% for domestic companies. It will be 25.17% inclusive of all cess and surcharges. The finance minister Nirmala Sitharaman today gives a prospective to slash down the corporate tax rate for domestic as well as for new domestic manufacturing companies.
The existing rate for the new manufacturing companies was 25% which is now brought down by 15%. Now, the effective tax rate after surcharge and cess will be 17%. The cut down on corporate income give a boost to Nifty and Sensex, before announcement they were trading flat now rise up to 5% each.
“In order to promote growth and investment, a new provision has been included in the Income Tax act, that allows any domestic companies an option to pay income tax at the rate of 22% without exemptions. Amendments will be made through an ordinance to IT Act. These companies will not be required to pay MAT,” said Sithraman in a press conference ahead of the GST Council meet in Goa.
Sitharaman also announced that there will be no requirement to pay MAT (Minimum Alternative Tax) for those companies which pay income tax at 22% without any exemption or incentives.
She said that the corporate and other relief measures will make 1.45 lakh crore annual reduction in revenue, but these measures are done to promote investment and growth. She added “Tax concessions will bring investments in Make in India, boost employment and economic activity, leading to more revenue,”
The government also announced not to levy enhance surcharge introduced in Budget 2019, on the capital gains arising from the sale of any security including derivatives in hands of foreign portfolio investors.
