FM Nirmala Sitharaman cuts down corporate tax, MAT to empower manufacturing sector
Goa: Union Finance Minister Nirmala Sitharaman on Friday announced corporate tax rate cuts to 22 per cent for domestic companies and 15 per cent for newly-formed domestic manufacturing companies among other fiscal measures to boost the investments in the country.
With the implementation of the cuts, the government will have to forego Rs 1.45 lakh crore per year, Sitharaman said at a press conference in Panaji ahead of the GST Council meet.
The tax relief for domestic companies, effective from Apr 1, implies that the government has reduced the effective corporate tax from 30 per cent to 25.17%, which is inclusive of all cess and government charges for the domestic companies and is applicable only if they do not avail any other exemptions or incentives.
Therefore, the effective tax for the companies not availing any concessions or incentives will be 22%.
It means that companies opting for this tax slab will have to pay only Minimum Alternate Tax (MAT).
The MAT has also been slashed to 15 per cent from 18.5% for those who will opt to continue paying the surcharge and cess.
For the domestic companies formed after Oct 1 will have to pay tax at the 15 per cent rate, if they do not avail any incentives or concessions.
Inclusive of surcharge and cess, the effective tax rate will be 17.01%.
The Income Tax Act and Finance Act will be amended through ordinance.
Companies can claim the new tax benefits after the expiry of the current tax holidays and concessions they are availing.
Listed companies who had announced buyback before July 4, will be exempted from buyback tax.
Sitharaman clarified that foreign companies in a joint venture(JV) with Indian companies, having a branch or arm in India will also be benefittd by the cuts.
The Finance Minister mentioned that no sunset clause binds the new rates announced today.
Additionally, Foreign Portfolio Investors (FPI) have been exempted from super-rich tax on capital gains from the sale of security including derivatives.
Private companies can now assign their R&D projects to IITS, NIITs and national laboratories, for which they can divert their 2 per cent CSR spend to these institutions.
The Finance Minister exuded confidence that these measures will attract investments for Make in India, and give a big push to economic activity and raise employment.
Image Credit: PIB Archive
Support Our Journalism
We cannot do without you.. your contribution supports unbiased journalism
IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.
