In a boost to revive the economy, Finance Minister Nirmala Sitharaman today proposed to slash the income tax rates for domestic companies and new domestic manufacturing companies. FM Sitharaman made these announcements while addressing the media ahead of GST council meet in Goa.
FM Nirmala Sitharaman: To boost Make in India, another insertion inserted to Income Tax Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing an option to pay income tax at rate of 15%. https://t.co/cWSg5xZhgu
— ANI (@ANI) September 20, 2019
In a bid to give an impetus to the ‘Make in India’ campaign, FM Sitharaman said that another insertion has been inserted in the Income Tax Act with effect from 2019-20 which will allow new domestic company incorporated after 1st October 2019 to make fresh investment in manufacturing with an option to pay income tax at the rate of 15%.
She further added that domestic companies can also pay income tax at the rate of 22% if they do not avail any incentive or exemptions. The effective tax rates for these companies will be 25.17% including surcharge and cess. To those companies who continue to avail the incentives, the minimum alternate tax (MAT) has been reduced to 15% from the current 18.5%.
Sitharaman also added that to stabilise the flow of funds in the capital market, the enhanced surcharge that was provided in the July 2019 budget presented after the new government was formed, will not be applicable 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, she added.
Union Minister also announced relief to listed companies. Those companies which had made announcements of buyback prior to 5th July 2019 will not have to pay tax on such buyback of shares.
Following the announcements, the Sensex was up by over 1300 points and Nifty hit 11,000 points following the announcements.
