Mumbai: In the massive growth for the corporate sector, the government reduced the effective corporate tax to 25.17 per cent of all cess and surcharge for domestic companies..
Finance Minister Nirmala Sitharaman announced while announcing that the new tax rate will be applicable from the current fiscal year which started from April 1.
Sitharaman said that there would be an increase of Rs 1.45 lakh crore in revenue on the reduction of corporate tax and other relief measures.
This, she said, is being done to promote investment and development.
In fact, the corporate tax rate for domestic companies will be 22 per cent if they do not take any incentive or concession.
The changes to the Income Tax Act and the Finance Act would be made effective through an ordinance.
The minister also said that companies opting for the 22 per cent income tax slab will not have to pay the minimum alternative tax (MAT).
Sitharaman further said, new domestic manufacturing companies, incorporated after October 1, can pay income tax at the rate of 15 per cent without any incentive.
Meaning, the effective tax rate for new manufacturing companies would be 17.01 per cent in all surcharges and cesses.
Sitharaman further said that companies can opt for a lower tax rate after the expiry of tax and the elimination of concessions.
The government has also decided not to impose the enhanced surcharge introduced in the budget on capital gains arising from the sale of equity shares in a company responsible for securities transaction tax (STT).
In addition, the super-rich tax will not apply to capital gains arising from the sale of any security, including derivatives, in the hands of foreign portfolio investors (FPIs).
In another relief, the minister said that companies which have announced the purchase of shares before July 5, will not be charged super-rich tax.
Companies are now allowed to spend 2% of their CSR on incubation, IITs, NITs and national laboratories.
Sitharaman expressed confidence that tax concessions would bring investment in Make in India, boost employment and economic activities, thereby generating more revenue.
(With PTI Inputs)
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