Govt slashes corporate tax rate for domestic firms

In a bid to boost the economy, Finance Minister Nirmala Sitharaman on Friday announced the slashing of corporate tax rate on domestic manufacturing companies and new domestic manufacturing firm.

Announcing the new tax cuts, she said: “We today propose to slash the corporate tax rates for domestic companies and for new domestic manufacturing companies.”

She also revealed that an ordinance to slash corporate tax rates for domestic companies has been cleared by Cabinet.

She said the new effective tax rate will be reduced from 30 per cent to 25.2 per cent, which includes all surcharges and is applicable on those companies that aren’t availing any incentives.

“To provide relief to companies which continue to avail incentive or exemptions, even for them we are giving a Minimum Alternate Tax(MAT) relief, the MAT rate has been reduced to 15% from the existing 18.5%.” she said.

In the past few weeks, the government has announced a series of steps to to boost the economic  growth that had fallen to six-year low of 5% in June quarter.

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The announcement came ahead of the GST council meets scheduled in Goa today. Last week, the government had announced a series of measures to revive the housing sector and boost exports.

Here are the highlights:

* “Tax rate of 25.17 % on domestic firms.”

* “Relief to listed companies, which have made public announcements of buyback before July 5 2019, it is provided that tax on buyback of shares shall not be charged, the minister said.”

* “To provide relief to companies which continue to avail incentive or exemptions, even for them we are giving a Minimum Alternate Tax(MAT) relief, the MAT rate has been reduced to 15% from the existing 18.5%.”

* “Total revenue foregone for reduction in corporate tax rate and other relief measures is 145, 000 crore.”

* “In order to stablise the flow of funds into the capital market, 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.”

* “The enhanced surcharge shall not apply on capital gains arising on sale of any security including derivatives in the hands of foreign portfolio investors.”

*Relief to listed companies which have already made a public announcement of buy-back before 5th July 2019. There will be no tax on buy-back of shares in case of such companies: FM Sitharaman

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