With an aim to revive growth and investment in country, Finance Minister Nirmala Sitharaman has come up with a slew of measures including a cut in corporate taxes. The government has also decided to not levy enhanced surcharge introduced in Budget on capital gains arising from the sale of equity shares in a company liable for securities transaction tax (STT).
A new provision has been inserted in the Income-tax Act with effect from FY 2019-20 which allows any domestic company an option to pay income-tax at the rate of 22% subject to condition that they will not avail any exemption/incentive. The effective tax rate for these companies shall be 25.17% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax.
Besides, any new domestic company incorporated on or after October 01, 2019 making fresh investment in manufacturing, can pay income-tax at the rate of 15%. This benefit is available to companies which do not avail any exemption/incentive and commences their production on or before 31st March, 2023. The effective tax rate for these companies shall be 17.01% inclusive of surcharge & cess. Also, such companies shall not be required to pay Minimum Alternate Tax.
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