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India Inc. gets another boost from Finance Minister!

India Inc. gets another boost from Finance Minister!

ChandrasekaranBy : Chandrasekaran

  |  20 Sep 2019 10:59 AM GMT

The Finance Minister addressed a press conference on Friday (20/09/2019), announcing a series of measures to boost the economy. One of the major announcements was the slashing of corporate tax rates to 22% from the existing 30% for domestic companies. This means that a domestic company can pay tax at 22% without exemptions. The net tax rate would be 25.17% including surcharges and cess. New domestic manufacturing companies will be taxed at 15% to attract investments and give thrust to the Make-in-India initiative. The effective tax rate for these companies will be 17.01% inclusive of surcharge and cess. Also, these companies need not pay Minimum Alternate Tax of 15%. These reliefs come in the light of meetings the Finance Minister held with various representatives from the industry over the past two weeks.

Another noteworthy step is the expansion of 2% CSR spending to incubators under Central and State Governments as well as PSUs. This will allow flow of funds to public funded universities, IITs, CSIR Labs that engage in research in the fields of science, technology, engineering and medicine.

A uniform tax rate on all companies simplifies the taxation process and also ensures compliance. India has one of the highest corporate taxes ranging from 25-40%. An expert committee that submitted a report on direct tax to the government suggested keeping a flat corporate tax rate of 25%. The government has gone a step ahead and has slashed the rate to 22%.

These measures have been made through the Taxation Laws (Amendment) Ordinance 2019 that seeks to amend the Income Tax Act 1961 and Finance Act 2019.

The tax sops will give companies more elbow room to make capital investments which will stimulate the economy by creating more demand and employment opportunities.

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