Centre reduces corporate tax
Government has announced a huge rate cut in the corporate tax rates from 30% to 22%. The announcement was made by the Finance Minister Nirmala Sitharaman at 37th GST council meeting in Goa. For this, the Ministry of Finance has brought in the Taxation Laws (Amendment) Ordinance 2019 to make certain amendments in the Income-tax Act 1961 and the Finance (No. 2) Act 2019.
Aim:
The reduction in corporate tax aims to boost manufacturing in the country.
Key Highlights:
For Domestic company:
Government has announced a huge rate cut in the corporate tax rates from 30% to 22%. The announcement was made by the Finance Minister Nirmala Sitharaman at 37th GST council meeting in Goa. For this, the Ministry of Finance has brought in the Taxation Laws (Amendment) Ordinance 2019 to make certain amendments in the Income-tax Act 1961 and the Finance (No. 2) Act 2019.
Aim:
The reduction in corporate tax aims to boost manufacturing in the country.
Key Highlights:
For Domestic company:
- The provision will also allow any domestic company to pay an income-tax at the rate of 22% with the condition that they will not avail any exemption/incentive.
- The effective rates will be 25.17% inclusive of surcharge & cess.
- The new law cancels the Minimum Alternate Tax (MAT) for the companies.
- Any new domestic company which is incorporated on or after 1st October 2019 will make fresh investment in manufacturing is to pay an income-tax at the rate of 15%.
- The effective tax rate for these companies will be 17.01% inclusive of surcharge & cess.
- These companies need not be required to pay Minimum Alternate Tax (MAT).
