NEW DELHI: Prime Minister Narendra Modi on Friday termed as a "historic step" the government's decision to slash corporate tax rates for domestic companies to spur growth and investment in the country and said it will give a "great stimulus" to the 'Make in India' initiative.
"The step to cut corporate tax is historic. It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians," he said in a tweet.
The announcements in the last few weeks clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $5 Trillion economy.— Narendra Modi (@narendramodi) September 20, 2019
The Prime Minister stressed the recent announcements show that the government is "leaving no stones unturned" to make India more business-friendly and to achieve a USD 5 trillion economy in the next few years.
"The announcements in the last few weeks clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $5 Trillion economy," Modi said in a follow-up tweet.
Bringing in tax cuts and fiscal reliefs through an Ordinance, the Centre today slashed domestic corporate tax to an effective 25.17 per cent, inclusive of all surcharges and cess, in a bid to promote growth and investments amid economic slowdown that would cost the exchequer Rs 1.45 lakh crore.
The effective corporate tax rate earlier was 30 per cent.
Addressing a presser in Goa, Finance Minister Nirmala Sitharaman said that manufacturing companies set up after October 1 will have the option to pay 15 per cent tax. "The effective tax rate for new manufacturing firms will be 17.01 per cent inclusive of surcharge and tax," she said.
The government has also decided to expand the scope of corporate social responsibility (CSR) two per cent spending.
The government has also decided to not levy enhanced surcharge introduced in the Budget on capital gain arising from sale of equity shares in a company liable for securities transaction tax.
Also, the super-rich tax will not apply on capital gains arising from sale of any security including derivatives in hands of foreign portfolio investors.
In another relief, the minister said listed companies which have announced a buyback of shares prior to July 5, will not be charged with super-rich tax.