Nirmala Sitharaman press conference: The Finance Minister has proposed to slash corporate tax rate for domestic companies and new domestic manufacturing companies.
Nirmala Sitharaman press conference: Union Finance Minister Nirmala Sitharaman addressed a press conference in Panjim, Goa on September 20, 2019. The Finance Minister announced that the Government has proposed to slash the corporate tax rates for domestic companies and for new domestic manufacturing companies. Sitharaman stated that the ordinance for slashing the tax rate has already been passed. The tax exemptions will be effective from the current financial year which began on April 1, 2019.
Nirmala Sitharaman conference: Key Points
1. Corporate tax rate slashed: The Finance Minister has proposed to slash the corporate tax rate for domestic companies and new domestic manufacturing companies. The corporate tax rate after surcharge will now be 25.17 percent inclusive of all cess and surcharges for domestic companies. The corporate tax rate has been brought down from 30 percent to 22 percent.
2. New domestic company to pay income tax at 15%: To attract more investment in manufacturing and boost Make in India, a new insertion has been made in the Income Tax Act with effect from 2019-20, which will allow any new domestic company incorporated on or after October 1, 2019 making fresh investment in manufacturing to pay income tax at a rate of 15 percent. The effective tax rate for these companies will be 17.01 percent inclusive of all surcharge and cess.
3. Domestic company to pay income tax at 22%: To boost growth, another provision has been inserted in the Income Tax Act with effect from the fiscal year 2019-20, which will allow any domestic company to pay income tax at 22 percent subject to the condition that they will not avail any incentive or exemptions. The effective tax rate for these companies shall be 25.17 % inclusive of all surcharge and cess. The companies shall also be exempted from paying the Minimum Alternate Tax(MAT).
4. MAT reduced from 18.5% to 15%: For companies that continue to avail incentive or exemption, the government has decided to provide a Minimum Alternate Tax(MAT) relief. The Mat rate has been reduced from the existing 18.5 percent to 15 percent.
5. Buyback Tax exempted: The listed companies that announced buyback before July 5, 2019 will not be charged tax on buyback of shares.
6. Enhanced surcharge not applicable on capital gains: To stabilise the flow of funds into the capital market, the government has decided that the enhanced surcharge introduced in Budget of July 2019 will not apply on capital gains arising on sale of equity share in a company or a unit of an equity-oriented fund. The enhanced surcharge shall not apply on capital gains arising on sale of any security including derivatives in the hands of foreign portfolio investors.
The Finance Minister said that total stimulus is worth Rs 1.45 lakh crore, which is approximately 1 percent of GDP. This is being done to promote investment and growth. These moves are a part of initiatives that the centre is taking to boost the economy of the country and to bring growth on track.