Direct Tax Services
Audit
Consulting
ESG Advisory
RBI Services
SEBI Services
IRDA Registration
FEMA Advisory
Compliances
IBC Services
VCFO Services
Growing
Developing
ME-1
ME-2
EU-1
EU-2
SE
Others
Select Your Location
In a recent announcement, the Finance Minister of India, Nirmala Sitharaman[1] slashed corporate tax rates. The government did reduction in corporate taxes rate to 22% from the reigning tax slab of 30%. Additionally, the tax rate for the new manufacturing company has been reduced to 15% from the prevailing rate of 25%.
The news came as a part of series of measures practiced by the government to strengthen the falling economic growth. The economic growth has been down below the 5% mark. The impact of this decision is positive for the markets. The move was welcomed by the investors as well as the corporate world. However, the government will lose 1.45 lakh crores in revenue as an adverse impact of the decision.
The domestic company can pay 22% tax, excluding cess and surcharge. The effective tax rate after accounting for cess and surcharge will be 25.17 %. The effective tax rate, including cess and surcharge, will be 17%.
There is another beneficial provision for manufacturing companies. The manufacturing companies incorporated after October 2019 and commence production before March 23 will pay 15 % corporate tax in place of 25 %. The companies will pay tax as per the prevailing income tax slab after the expiry of their tax holiday period.
Additionally, enhanced surcharge announced during the budget session is not applicable to capital gains arising on the sale of any securities. These securities include derivatives in the hands of foreign portfolio investors. The capital gain that arises as a result of the sale of equity shares in a company or in a unit of a business trust or an equity fund liable to the tax under securities transaction tax is also exempted from tax purview.
For the listed companies, the companies that announced a buyback of shares before July 2019 are not liable to pay tax ohm buyback of shares. The tax rates are applicable from the current fiscal year that began on April 1, 2019.
Further, the Minimum Alternative Tax rate has been reduced to 15 % from the existing 18.5 %for companies which opt for incentive or exemptions.
The government has expanded the scope of spending 2 % of profits on corporate social responsibilities. Entities can now spend the amount on incubators, research grants to institutes that are promoting scientific research.
“Tax concessions will bring investments in Make in India, boost employment and economic activity, leading to more revenue,”- Quoted by the Finance Minister.
After the Reduction in Corporate Taxes, The market responded positively after the announcement. Major industrial chambers and federations appreciated the move of the finance ministry.
Slashing tax rates is a bold and timely move from @PMOIndia and Hon. @nsitharaman that promises to set the economy on a new growth trajectory. Grateful to Government for this great decision. ~ @vikramkirloskar, President, CII @FinMinIndia @nsitharamanoffc @PIB_India @PTI_News pic.twitter.com/uPATOk6f5C— Confederation of Indian Industry (@FollowCII) September 20, 2019
Slashing tax rates is a bold and timely move from @PMOIndia and Hon. @nsitharaman that promises to set the economy on a new growth trajectory. Grateful to Government for this great decision. ~ @vikramkirloskar, President, CII @FinMinIndia @nsitharamanoffc @PIB_India @PTI_News pic.twitter.com/uPATOk6f5C
With these measures, Indian corporate tax rates have come down to amongst the lowest in the world, especially for the new manufacturing companies. These decisions will be celebrated as historic and will go a long way in improving ‘Ease of Doing Business In India’ even further. We, at BSE, welcome these moves and thank the Hon’ble PM and Hon’ble FM for promoting industrialization in India with these measures. These announcements will further boost the investor confidence and start the investment cycle – Ashishkumar Chauhan, MD & CEO, BSE
Read More: What are the Income Tax Laws for Startups in India .
The market sentiments can be understood by the fact that the share market took a plunge of 10-year high record for a single session gain. The Sensex was up by 1921.15 points or 5.32 % and closing at the mark of 38014.62. Nifty, on the other hand, was up by 569.40 points closing at 11274.20.
Read our article:Corporate Tax Rate Cut to Increase the Manufacturing of Electronic Vehicles Parts
Akash Dubey is a Law Graduate and works as an Advisor at Enterslice. He is proficient in Legal and Financial Advisory. His expertise in the skills of Legal and Financial Research is an aid to his strengths as an Advisor.
Many investors use fixed deposits as their primary investment vehicle. Investors with a high-ri...
The main idea of CDS, which was initially to give banks a way to transfer credit exposure, has...
Black money has been the subject of heated political debate in India for a long time. Successiv...
The Apex Court pronounced a judgement in the case titled Tata Motors Vs The Brihan Mumbai Elect...
Since economies are moving towards digitalisation and making it feasible to conduct transaction...
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Are you human?: 6 + 6 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
Finance plays a significant role in every business. In many circumstances, the own finances of an individual are no...
24 Apr, 2020
As a taxpayer, one may be unclear about the taxability of dividend income and also how to report dividend income on...
11 Nov, 2021
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!