Finance Minister Nirmala Sitharaman, on Friday, 20 September, proposed to slash corporate tax for domestic companies and new local manufacturing companies in order to ease the economic slowdown, bring more investments in Make in India and boost employment in the country.
Here are all the announcements made by the finance minister:
- The finance minister said that any domestic company gets an option to pay income tax at a rate of 22 percent, which will be subject to a condition that they will not avail any incentive.
- The companies opting for 22 percent income tax rate won't have to pay the minimum alternative tax – the effective rate will be at 25.17 percent including surcharge and cess, the finance minister said.
- The new domestic manufacturing companies incorporated after 1 October 2019 will pay only 15 percent rate, without any incentive.
- Sitharaman also announced that the effective tax rate for new manufacturing companies will be 17.01 percent, inclusive of all surcharges and cess.
- Companies can opt for a lower tax rate after the expiry of tax holidays, concessions they are availing currently.
- Enhanced surcharge introduced in this year's Budget shall not apply on capital gain arising on sale of equity shares in a company liable for Securities Transaction Tax.
- The Super-rich tax not to apply on capital gains arising from the sale of any security including derivatives in the hands of Foreign Portfolio Investors (FPI).
- The companies that had announced a buyback of shares prior to 5 July will not be charged with tax, Sitharaman further announced.
- The total revenue foregone for reduction in the corporate tax rate is estimated at a Rs 1.45 lakh crore per year amount.
Wrapping up the press conference, the finance minister said that these tax concessions will bring more investments in Make in India, it will boost employment and economic activity and lead to more revenue.
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