Bowing to the demand of India Inc, government today lowered the corporate tax rate by 5% to 30%.Announcing the proposal while presenting the Union Budget for 2005-06 in Lok Sabha, finance minister P Chidambaram, however, retained the 10% surcharge on corporate tax.The rate of depreciation will be 15% for general machinery and plant but the initial depreciation rate will be increased to 20%, he said.Chidambaram said the requirement of 10% increase in installed capacity for availing the benefit of initial depreciation has been removed.To encourage technological upgradation, the witholding tax on technical services has been reduced to 10% from 20%. Credit will be allowed for the minimum alteranate tax paid under section 115 JB of the income taxact. The securities transaction tax (STT) has been raised marginally to 0.02% from the present 0.015%, he said.The terminal dates on exemptions given for specific purposes have been extended by two years to March 31, 2007 in three cases, he said.These included weighted deduction of 150% expenditure on in-house research and development facilities of companies engaged in the business of biotechnology, pharmaceuticals, electronic, telecommunications, chemicals or any other notified product.Deduction of profits of new industrial undertakings in Jammu and Kashmir and 100% deduction of profits of companies carrying on scientific research and development and approved by the department of scientific and industrial research are the other two cases, he said.
