The new tax rate will be applicable from the current fiscal which began on 1 April.
Finance Minister Nirmala Sitharaman proposed to slash corporate tax for domestic companies and new domestic manufacturing companies. Corporate tax were reduced to 22% without exemptions. Effective corporate tax after surcharge to be 25.17%.To attract investments in manufacturing companies, local companies incorporated after October 2019 to pay tax at 15%. Effective corporate tax for new companies after cess and surcharge to be 17.01%.
Companies enjoying tax holidays can avail concessional rates after exemption period.
FM gave Minimum Alternate Tax (MAT) relief for those opting to continue paying surcharge and cess. MAT was reduced to 15% from 18.5% for companies to continue to avail exception and incentives.
Enhanced surcharge will not apply to capital gains by foreign portfolio investors (FPIs).
Buyback tax for listed companies announcing buyback before 5th July is exempted.
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Total revenue forgone for reduction on corporate tax and other measures announced is Rs 1.45 lakh crore per year.
The government expects tax basket to widen with lower tax rate. Economic buoyancy will itself generate revenue, said Sitharaman. New corporate tax to be lowest in Southeast Asia. Want to have more investment in Make in India, FM added.
RBI Governor Shaktikanta Das said tax rate cut announced today takes India closer to Asian peers.
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