Proposal to cut corporate rate taxes
- The FM has proposed to slash corporate tax rates for domestic companies and domestic manufacturing companies.
- Ordinance for cutting tax rate has been passed as follows.
- Corporate tax rate to be 22% without exemptions, inclusive of surcharge and cess. No Minimum alternative tax (MAT) applicable.
- Effective corporate tax rate after surcharge to be 25.17%.
- To attract investment in domestic manufacturing, any new domestic company incorporated on or after Oct 1, 2019, will have a tax rate of 15%.
- No MAT applicable on these cos.
- This is available to cos who do not avail exemption and commence production before Mar 31, 2023.
- Govt to give MAT relief for those opting to continue paying surcharge and cess. MAT has been reduced to 15% from 18.5% for companies who continue to avail exemptions and incentives.
- To stabilize fund flow in capital markets, enhanced surcharge introduced in budget 2019 shall not apply on capital gains arising on sale of equities in the hands of individuals, HUFs, AOP, etc.
- Enhanced surchage will not apply to capital gains arising on sale of any securities including derivatives in the hands of FPIs.
- For listed cos that have already made public announcement of buyback before July 5, 2019, tax on buyback shall be removed.
- The 2% CSR fund can be spent on incubators funded by center or state govts or any agency or PSU or central/state govts as well as public funded universities such as IITs.
- Total revenue forgone for the reduction in corporate tax rate and other reliefs is ~1.45 lakh cr.
- All eyes are now on the GST Council meet scheduled today with expectations of tax rate cuts in auto, hotels, biscuits, cement.
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