Waking ahead to promote corporate growth investment and allow the domestic companies to ease the business procedures, Finance Minister Nirmala Sitharaman on Friday moved up slashing the corporate tax for the domestic companies while making other amendments to the Income Tax Act and the Finance Bill at Panaji in Goa.
“While the ordinance for cutting tax rate has been passed, the corporate rate tax for the domestic companies and the newly establishing manufacturing companies is to be 22% without exemptions, inclusive of surcharge and cess. No MAT applicable on such companies”, she said adding that the effective corporate tax rate after surcharge would be 25.17 per cent.
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Further to attract investment in manufacturing, Sitharaman said that the local companies incorporated after October 2019 would now onwards pay tax at 15 per cent. “To stabilise flow of funds into the market the enhanced surcharge announced in Budget 2019 will not apply on capital gains arising on sale of any security, including derivatives by foreign portfolio investors”, she added.
Reading aloud the notification for the listed companies which made announcement for public buyback before July 2019, the Finance Minister provided to not to charge tax on buyback on shares of such companies. “To provide relief to companies which 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% from the existing 18.5%”, she said.
Finance Minister also announced that effective tax for new companies shall be 17.01 percent, including cess and surcharge. Companies enjoying tax holidays would be able to avail concessional rates post the exemption period. “Total revenue foregone by undertaking these measures is Rs 1.45 lakh crore per year”, she affirmed.
With this to boost Make in India, the Centre inserted another insertion to the Income Tax Act with effect from 2019-20, allowing new domestic company incorporated on or after October 1, 2019 to pay income tax at rate of 15%.
After meeting PSU bank heads on September 19, the Finance Minister said there already exists a circular from the Reserve Bank that provided for stressed loan accounts of MSMEs not being declared non-performing assets. “Banks have been asked to follow that circular and not declare any stressed MSME loan as NPA till March 2020 and look at recasting their debt. This would help the MSME sector”, she added.