Finance minister announces tax relief to strengthen corporate sector

Finance minister announces tax relief to strengthen corporate sector
Finance minister announces tax relief to strengthen corporate sector

Finance Minister Nirmala Sitharaman, on Friday, announced multiple reductions in corporate tax, Minimum Alternate Tax (MAT), CSR to strengthen the corporate sector and give the economy a much-needed boost. She said, “We propose to slash corporate tax rates for domestic companies and new domestic manufacturing companies.”

To boost Make in India, Sitharaman said, “another insertion in the Income Tax Act with effect from 2019-20 allows any new domestic company incorporated on or after October 1, 2019 making fresh investment in manufacturing an option to pay income tax at the rate of 15%.”

Companies that do not avail any exemption or incentive have also been given tax concession. “To promote growth, a new provision has been inserted into the Income Tax Act with effect from fiscal year 2019-20, which allows any domestic company to pay income tax at the rate of 22% subject to the condition, they will not avail any incentive or exemptions,” Sitharaman said. As for companies which are availing benefits, they have further relief in the form of reduced MAT.

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“To provide relief to companies which continue to avail incentive or exemptions, we are giving a Minimum Alternate Tax (MAT) relief. The MAT rate has been reduced to 15% from the existing 18.5%.” To stablise the flow of funds into the capital market, the Finance minister announced, “it is provided that enhanced surcharge introduced in Budget of July 2019, shall not apply on capital gains arising on sale of equity share in a company or a unit of a equity oriented fund.”

There is a caveat though. “The enhanced surcharge shall not apply on capital gains arising on sale of any security, including derivatives in the hands of foreign portfolio investors,” she added.

-PTC News