Parul
Finance Minister, Nirmala Sitharaman has announced a big reduction in income tax rate for corporates. The minister quoted that 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%.
In fact, over the past few weeks, the Modi government has been announcing a series of measures to boost growth that had fallen to a six-year low of 5% in June quarter.
The finance minister also quoted that the revenue foregone for the reduction in corporate tax rate and other relief measures announced is likely to cost the government ₹ 1.45 lakh crore per year.
Look at some of the key announcements:
Government has proposed to slash corporate tax rate. Ordinance regarding this has already been passed. New tax rate will be applicable from the current fiscal which began on April 1.
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 the Budget shall not apply on capital gains arising on sale of any securities including derivatives in the hands of foreign portfolio investors
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 existing 25%.
Enhanced surcharge announced in Budget will not be applicable 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%
Companies can opt for lower tax rate after expiry of tax holidays and concessions that they are availing now.
