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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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