Tax Bonanza For Domestic, News Manufacturing Companies As FM Nirmala Sitharaman Slashes Corporate Tax To 25%

20 Sep 2019 10:45 AM GMT
Tax Bonanza For Domestic, News Manufacturing Companies As FM Nirmala Sitharaman Slashes Corporate Tax To 25%
Image Credits: Patrika

Finance minister Nirmala Sitharaman announced corporate tax cut to 25.17 per cent from 35 per cent inclusive of all the cess for all the domestic companies from April 1. The companies will also be exempted from the Minimum Alternative Tax (MAT).

The tax cut will increase the burden on the government to the tune Rs 1.45 lakh crore. The move is an attempt to attract private investment as the Indian tax rate is now at par with the other Asian countries. Reserve Bank Governor Shaktikanta Das welcomed the government’s decision and called it a ‘bold move’. The tax cut, however, would be subjected to the condition that the domestic companies do not avail of any tax incentives or exemptions.

Apart from the tax cut, Sitharaman announced a series of measures to boost the economy. New domestic manufacturing companies, incorporated on or after October 1, 2019, will be allowed to pay corporation tax at the rate of 17.01 per cent. To provide relief to companies that continue to avail of exemptions and incentives, the rate of MAT has been reduced from 18.5 per cent to 15 per cent.

Enhanced surcharge introduced by the Finance Act 2019 shall not apply to capital gains arising on sale of equity share in a company/unit of equity-oriented fund or unit of business trust liable for a securities transaction tax, the FM announced. The enhanced surcharge shall not apply to capital gains on the sale of any securities, including derivatives, in the hands of Foreign Portfolio Investors (FPIs).

Listed companies which have made a public announcement of buyback before July 5, 2019, will be exempted from paying tax on buyback of shares.

The finance minister also announced an expansion in the scope of CSR activities. The companies can now spend up to 2 per cent of their money on state or union govt incubators, PSUs, state universities, IITs, or public-funded entities.

Also Read: Government Bans E-Cigarettes But Not Tobacco, Who Stands To Gain?

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