Highlights of Finance Minister Nirmala Sitharaman's tax rate cut announcement 

The corporate tax rate has been slashed to 22 per cent for domestic companies not availing any incentives/exemptions; earlier rate 30 per cent.

Published: 20th September 2019 01:21 PM  |   Last Updated: 20th September 2019 01:22 PM   |  A+A-

Income Tax

For representational purposes


PANAJI: Following are the highlights of the announcements made by Finance Minister Nirmala Sitharaman on reduction in corporate tax and other fiscal relief measures for the economy to promote growth and investment:

  • The corporate tax rate has been slashed to 22 per cent for domestic companies not availing any incentives/exemptions; earlier rate 30 per cent

  • The effective tax rate for such companies now stands at 25.17 per cent including cess and surcharge; earlier it was 34.94 per cent

  • Also, such companies shall not be required to pay Minimum Alternate Tax (MAT)

  • New domestic companies incorporated on or after Oct 1, 2019, making fresh investment in manufacturing can pay income-tax at a rate of 15 pc; the earlier rate was 25 per cent

  • However, lower tax is applicable if the companies do not avail any exemption/incentive, and commence production by March 31, 2023

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  • Their effective tax rate will be 17.01 per cent inclusive of surcharge and cess; earlier the rate was 29.12 per cent

  • These companies, too, will not be required to pay MAT

  • For cos which continues to avail exemptions/incentives, the MAT has been reduced from 18.5 per cent to 15 per cent

  • Enhanced super-rich tax on capital gains on the sale of a share in hands has been removed

  • An enhanced surcharge will also not apply to capital gains on the sale of a security in the hands of foreign portfolio investors (FPIs)

  • Enhanced surcharge introduced in Budget shall not apply on capital gain arising on sale of equity shares in a Co liable for Securities Transaction Tax (STT)

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  • No tax on buyback of shares if companies have made an announcement regarding it before July 5 2019

  • Scope of corporate social responsibility (CSR) activities have been expanded

  • Lower tax rates are effective from April 1, 2019

  • Changes in Income Tax Act, 1961 and Finance Act, 2019 made through an ordinance.

  • Revenue foregone for the reduction in corporate tax and other relief is estimated at Rs 1.45 lakh crore.

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