Finance Minister, Nirmala Sitharaman, in an announcement at Goa, slashed corporate tax and informed that the subsequent foregone revenue will amount to Rs 1.45 lakh crore annually. Announcing another round of measures to boost the economy, Nirmala Sitharaman cut the corporate tax by almost 10% points to 25.17%. She added that the reduction in tax rates has been done by promulgating an ordinance to an amendment to the Income Tax Act. The effective tax rate has come up to be 25.17% after considering surcharges and cess, this compares to a 30% corporate tax rate currently and an effective tax rate of 34.94%.
The Commerce and Industry Minister, Piyush Goyal, on Friday, supported Nirmala Sitharaman’s introduction of the tax cut and said that this measure will give a necessary fillip to the economy. He said at an event that, “Finance Minister's announcement on slashing corporate tax will give necessary fillip to the economy which we've been hoping for. We have had a series of measures and today's measures are the largest." He also added that the foregone revenue of ₹1.45L crores will benefit corporates. Piyush Goyal was hopeful that, businesses will be able to take benefit of these measures to spur growth. “These measures will help in making India a better investment destination. The announcement on tax will help companies like Coal India, Infosys and Wipro,” he said.
Congratulations to PM @NarendraModi ji & FM @NSitharaman for the pathbreaking announcement done to cut corporate taxes for domestic & new manufacturing companies which will boost ‘Make in India’, promote Investment & will create huge employment opportunities.— Piyush Goyal (@PiyushGoyal) September 20, 2019
To provide relief to companies that continue to avail exemptions and incentives, the rate of Minimum Alternate Tax (MAT) has been reduced from the existing 18.5% to 15%. Also, the super-rich tax introduced in Sitharaman's maiden budget on July 5 by way of a higher surcharge on income, shall not apply on capital gains arising on sale of equity shares in a company or business that is liable to pay securities transaction tax (STT). The enhanced surcharge shall also not apply to capital gains arising on sale of any security, including derivatives in the hands of foreign portfolio investors, she said. To provide relief to listed companies that have already made a public announcement of buyback of shares before July 5, 2019, tax on such buyback shall not be charged.
(With PTI Inputs)