In Continuation to our blog on highlights of FM’s booster package of Economy; to promote growth, new provisions are inserted by Finance Minister Nirmala Sitharaman in the Income Tax Act from fiscal year 19-20.
Finance Minister Nirmala Sitharaman today announced a big reduction in income tax rates for corporates.
- Basic corporate tax rate to be 22% from 30% without exemptions, Effective Tax Rate is 25.17% inclusive of all surcharges and cess for such domestic companies.
- Such companies also does not require to pay Minimum Alternative Tax.
- Companies can opt for lower tax rate after expiry of tax holidays and concessions that they are availing now.
- For new manufacturing companies that start production before March 2023 and incorporated on or after 1st October 2019, corporate tax rate brought down to 15% from 25%.
- The effective tax rate for new companies will be 17.01% inclusive of all surcharge and cess.
- MAT for companies that want to use tax exemptions cut to 15% from 18.5%
- Enhanced surcharge announced in Budget shall not apply on capital gains arising on sale of any securities including derivatives in the hands of foreign portfolio investors (FPI)
- Listed companies announcing share buybacks before 5 July 2019 to be exempt from buyback tax.
- Total revenue foregone by undertaking these measures is Rs 1.45 lakh crore per year.
- New tax rate will be applicable from the current fiscal which began on April 1 2019.