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Effective Tax Rates in India Slashed
Indian Finance Minister made several announcements for the corporate sector. The minister announced cuts in corporation tax among a series of announcements. Here are a few highlights
- FM proposes to slash corporate tax for domestic cos, new local manufacturing cos through an ordinance
- Any domestic company gets an option to pay income tax at a rate of 22 per cent subject to condition that they will not avail any incentive
- Companies opting for 22 per cent income tax slab won’t have to pay minimum alternative tax; effective rate will be 25.17 per cent including surcharges, cess
- New domestic manufacturing companies incorporated after Oct 1 can pay income tax at 15 pc rate without any incentives
- Effective tax rate for new manufacturing companies will be 17.01 per cent inclusive of all surcharge and cess
- Companies can opt for lower tax rate after expiry of tax holidays, concessions that they are availing now
- Enhanced surcharge introduced in Budget shall not apply on capital gain arising on sale of equity shares in a corporation liable for STT
- Super-rich tax not to apply on capital gains arising from sale of any security including derivatives in hands of FPIs
- Companies that announced buyback of shares prior to July 5 will not be charged with tax
- Total revenue foregone for reduction in corporate tax rate is estimated at Rs 1.45 lakh crore per year
- Tax concessions will bring investments in Make in India, boost employment and economic activity, leading to more revenue.
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