Government reduces corporate tax to 25.17% for domestic companies; Sensex up 1200 points
As part of a major fiscal stimulus, the government on Friday cut effective corporate tax to 25.17%, including all taxes and surcharges for domestic businesses.
In making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal year which started on April 1.
Sitharaman said revenue lost due to corporate tax reduction and other relief measures will be Rs 1.45 trillion per year.
This, she said, is done to promote investment and growth.
Indeed, the corporate tax rate will be 22 percent for domestic companies, if they do not benefit from any incentives or concessions.
The amendments to the income tax law and the finance law will be made effective by an ordinance.
The minister also said that companies opting for a 22% income tax slab would not have to pay the alternative minimum tax (MAT).
Sitharaman further said that new domestic manufacturing companies incorporated after October 1 can pay income tax at a rate of 15% without any incentives.
This means that the effective tax rate for new manufacturing companies will be 17.01%, including all surcharges and taxes.
Sitharaman further said companies can opt for a lower tax rate after the tax holidays and concessions they currently enjoy expire.
Markets applauded FM’s announcements, Sensex soared over 1200 points and Nifty gained 250 points