Early Diwali For Domestic Companies; FM Announces Cut In Corporate Tax Rate
GUWAHATI: The government on Friday, September 20 slashed effective corporate tax to 25.17 per cent inclusive of all cess from 30 percent and surcharges for domestic companies.
Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which will begin on April 1, 2020 and is subject to the condition that they will not avail any other incentive or exemptions.
Federation of Indian Chambers of Commerce & Industry (FICCI) on its Twitter said that the changes in the tax slab will certainly prove to be a much-needed booster dose in tackling the current slowdown & regaining the growth momentum.
"Lowering of income tax on corporates is a longstanding FICCI request," said Mr Sandip Somany, President FICCI.
Here are the major highlights from Nirmala Sitharaman announcements:
> Corporate tax rate to be 22% without exemptions, inclusive of surcharge and cess.
> No Minimum Alternate Tax (MAT) applicable on such companies.
> Effective corporate tax rate after surcharge to be 25.17 percent.
> To attract investment in manufacturing, local companies incorporated after October 2019 will pay tax at 15 percent.
> 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.
> Will give MAT relief for those opting to continue paying surcharge and cess. MAT has been reduced to 15 percent from 18.5 percent for companies who continue to avail exemptions and incentives.
> To stabilise the 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 (FPI).
> For listed companies which made an announcement for public buyback before July 2019, it is provided that tax on buyback on shares of such companies will not be charged.
> Total revenue foregone by undertaking these measures is Rs 1.45 lakh crore per year.
> The rupee extended the morning gains and rallied 66 paise to Rs. 70.68 against the USD on September 20 after FM announced several measures to promote investments and growth.