Finance minister Nirmala Sitharaman on Friday 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 move brings India’s corporate tax rate on par with East Asian countries, the minister said about the government’s initiative that sent pushed Sensex up by 5.23%, or nearly 1,900 points.
“In order to promote growth and investment, a new provision has been inserted in the Income-Tax Act with 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.
In 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.
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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.
Source: Hindustan Times
