Rally was triggered after Finance Minister Nirmala Sitharaman on Friday proposed to slash corporate tax for domestic companies and new domestic manufacturing companies.
At 12:05 IST, the benchmark Sensex was up 5.09%, or 1,837.52 points, to 37,930.99, while Nifty 50 index was up 526.15 points, or 4.92% at 11,230.95 points.
Finance Minister Nirmala Sitharaman in a Press Conference in Goa today, 20 September 2019 proposed to slash corporate tax for domestic companies and new domestic manufacturing companies.
In order to promote growth and investment, a new provision has been inserted in the Income-tax Act with effect from FY 2019-20 which allows any domestic company an option to pay income-tax at the rate of 22% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax.
In order to attract fresh investment in manufacturing and thereby provide boost to 'Make-in-India' initiative of the Government, another new provision has been inserted in the Income-tax Act with effect from FY 2019-20 which allows any new domestic company incorporated on or after 1 October 2019 making fresh investment in manufacturing, an option to pay income-tax at the rate of 15%. This benefit is available to companies which do not avail any exemption/incentive and commences their production on or before 31 March 2023. The effective tax rate for these companies shall be 17.01% inclusive of surcharge and cess. Also, such companies shall not be required to pay Minimum Alternate Tax.
In order to provide relief to listed companies which have already made a public announcement of buy-back before 5 July 2019, it is provided that tax on buy-back of shares in case of such companies shall not be charged. The total revenue foregone for the reduction in corporate tax rate and other relief estimated at Rs 145000 crore.
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