In a major fiscal booster, the government has slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies.
Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually.
She said the government was conscious of the effect the tax rebate would have on fiscal deficit and numbers would be reconciled.
— To boost ‘Make in India’, an insertion inserted to Income Tax Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing an option to pay income tax at rate of 15%.
— To promote growth, a new provision has been inserted in the income tax act with effect from fiscal year 2019-20, which allows any domestic company to pay income tax at the rate of 22% subject to condition they will not avail any incentive or exemptions.
— No Minimum Alternate Tax (MAT) on local companies.
— Enhanced surcharge introduced in Budget shall not apply on capital gain arising on sale of equity shares in a Co liable for STT.
— Companies can opt for lower tax rate after expiry of tax holidays, concessions that they are availing now.