Corporate tax cut: Finance Minister Nirmala Sitharaman Friday proposed to slash corporate tax rate for domestic firms and new domestic manufacturing companies. The finance minister said this at a press conference in Panjim, Goa.
The current corporate tax rate is 30%, which has been brought down to 22%. For new manufacturing companies the existing tax rate is 25% which has been brought down to 15%.
“In order to promote growth and investment, a new provision has been included in the Income Tax act, that allows any domestic companies an option to pay income tax at the rate of 22% without exemptions. Amendments will be made through an ordinance to IT Act. These companies will not be required to pay MAT,” said Sithraman in a press conference ahead of the GST meet.
Sitharaman announced that a domestic company can pay income tax at 22% if they don’t seek any exemption or incentives. The effective tax rate will be 25.17% inclusive of all surcharges and cess for such domestic companies. Such companies will also not be required to pay Minimum Alternative Tax.
Making the announcement, the finance minister said the new tax rate will be applicable from the current fiscal which began on April 1.
Sitharaman said the revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually. This, she said is being done to promote investment and growth.
The changes in the Income Tax Act and Finance Act will be made effective through an ordinance. The minister also said companies opting for 22 per cent income tax slab would not have to pay minimum alternative tax (MAT).