Sitharaman announces cut in corporate tax rates for domestic companies to boost economy
New Delhi | Jagran Business Desk: The government on Friday slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs.
“We today propose to slash the corporate tax rates for domestic companies and for new domestic manufacturing companies,” said the Finance Minister.
"Total revenue foregone for the reduction in corporate tax and other concession is estimated at Rs 1,45,000 crore per year," the Finance Minister added.
Sitharaman said this is being done to promote investment and growth. She further said that the changes in the Income Tax Act and Finance Act will be made effective through an ordinance.
"Tax concessions will bring investments in Make in India, boost employment and economic activity, leading to more revenue," the finance minister said in Goa.
She also said companies opting for 22 per cent income tax slab would not have to pay minimum alternate tax (MAT).
"To provide relief to companies that 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 per cent from the existing 18.5 per cent," she said.
The Finance Minister further said that the new domestic manufacturing companies incorporated after October 1, can pay income tax at a rate of 15 per cent without any incentives. Meaning, the effective tax rate for new manufacturing companies will be 17.01 per cent inclusive of all surcharge and cess.
The government also decided to not levy enhanced surcharge introduced in Budget on capital gain arising from the sale of equity shares in a company liable for securities transaction tax (STT).
Sitharaman, another major relief, said listed companies which have announced a buyback of shares prior to July 5, will not be charged with super-rich tax and will be permitted to use their 2 per cent CSR spend on incubation, IITs, NITs, and national laboratories.
The announcement comes amid demand for a rate cut, keeping in mind the revenue position and the need to boost sagging economic growth. The GST (Goods and Services Tax) Council, headed by Sitharaman, held a crucial meeting to decide on tax moderation.
Posted By: Aalok Sensharma