Historic Tax Reform: Reduction in Corporate Taxes<\/a><\/mark>.<\/p><\/div>\n\n\n\nWhat is Corporate Tax?<\/h2>\n\n\n\n Corporate tax or corporate income\ntax is levied by the federal and state governments on the profits made by the\ncorporate or businesses. In other words, corporate tax is a tax imposed on the\nnet income of a company.<\/p>\n\n\n\n
The definition of corporate tax<\/strong> according to Wikipedia is “A corporate tax, also known as corporation tax or company tax is a direct tax imposed by a jurisdiction on the income or capital of corporations or analogous legal entities.” Many countries impose these taxes at the national level and similar taxes are imposed at state or local levels. <\/p>\n\n\n\nIn India, both private and public companies are required to register under the Companies Act, 2013 and are liable to pay corporate tax. The current corporate tax rate has been reduced to 22% which was 30% earlier.<\/p>\n\n\n\n
What Are The Benefits Of The Rate\nCuts In The Corporate Tax?<\/h2>\n\n\n\n The following are the benefits that are projected\/ envisioned by the government through reducing Corporate Taxes;<\/p>\n\n\n\n
Reduction in taxes will increase the rush of the new manufacturing companies linked to the EV Sector. Also, it will help increase EV sales by making them more affordable by manufacturing them locally. The main motive behind this is to cut crude oil imports and well as high levels of pollution in most major cities.<\/li> Earlier, the Union Government had allotted Rs. 10,000 crore to accelerate the adoption of EVs in India under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India {FAME-2} scheme. But, sill most of the parts of vehicles were imported from abroad, the government is planning to totally stop this culture by reducing the corporate taxes.<\/li> Additionally, this decision could help attract investment in vehicle parts manufacturing sectors<\/li><\/ul>\n\n\n\nHowever, certain parts like airbags, sensors, inflators, etc. will continue to be imported<\/li> Basically, the government is aiming to help lower the production cost of lithium-ion batteries in India<\/li> Manufacturers of components such as solar electric charging equipment, lithium storage batteries, and other components will be offered investment-linked income tax exemptions under Section 35 AD of the Income Tax Act and other indirect tax benefits.<\/li> As per the speculations of Chirag Jain, an analyst at SBICAP Securities, these initiatives by the government will boost earnings by 3-8% as most auto companies pay taxes in the range of 28%-34% currently.<\/li><\/ul>\n\n\n\nConclusion<\/h2>\n\n\n\n The Indian Government envisions\nincreasing electronic vehicle parts production within India instead of\nimporting them. This would help reducing the electronic vehicle final cost, and\nincrease the trend of these vehicles in India. Also, this would help beat the\nenvironment pollution because of the use of crude oil use. Henceforth, the government has reduced the\nCorporate Tax for achieving these goals and to encourage the EV Sector. <\/p>\n\n\n\n
Read Also: What are the Income Tax Laws for Startups in India<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"India’s Electric Vehicles Industry is likely to receive a lot of support with the slashing of the Corporate Tax Rate on new manufacturing companies. The vision of the Ministry is to promote manufacturing of Electric Vehicle parts within India and stop importing them from abroad. This is because the value of Indian Rupees had drastically […]<\/p>\n","protected":false},"author":17,"featured_media":24917,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1473,2435],"tags":[2760,2761],"acf":{"service_id":"0"},"yoast_head":"\n
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