Finance Minister Nirmala Sitharaman is briefing the media ahead of the GST Council meeting later today. The government has slashed basic corporate tax rate to 22% from 30% while for new manufacturing companies it has been cut down to 15% from 25%. Over the past few weeks, the government has been announcing a series of measures to boost growth that had fallen to six-year low of 5% in June quarter. Last week, the government had announced a series of measures to revive the housing sector and boost exports. The GST Council is meeting today in Goa today amid demands from the industry for a fiscal stimulus. Indian stock markets surged today after this announcement, with Sensex rising over 1,000 points.
Here are some of the key announcements:
Govt proposes to slash corporate tax rate for domestic tax rate
Ordinance regarding this has already been passed
A domestic company can pay income tax at 22% if they don’t seek any exemption or incentives
Effective Tax Rate 25.17% inclusive of all surcharges and cess for such domestic companies
Such companies also not required to pay Minimum Alternative Tax
Companies availing exemptions can opt to pay tax of 22% after the exemption period is over
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
The govt expects to widen tax basket with lower tax rate
Buybacks pre-July 5 exempted from buyback tax
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%
Enhanced surcharge announced in Budget not to apply on capital gains arising on sale of equity share in a company or a unit of an equity oriented fund or a unit of a business trust liable for STT
MAT for companies that want to use tax exemptions cut to 15% from 18.5%
New tax rate will be applicable from the current fiscal which began on April 1.
Companies can opt for lower tax rate after expiry of tax holidays and concessions that they are availing now
