Government slashes Corporate Tax rate | Fusion - WeRIndia

Government slashes Corporate Tax rate

Government slashes Corporate Tax rate

In order to boost the economy, Finance Minister Nirmala Sitharaman yesterday said that the government has proposed to slash corporate tax rates.

The Finance Minister says that the new tax rate would be applicable from the current financial year beginning from April 1.

With this, the corporate rate would be 22 per cent without exemptions. Adding surcharges to it, the effective tax would be 25 per cent.

Any domestic company can pay the tax at the rate of 22 per cent. However, these companies are not entitled to avail any incentive or exemptions.

The tax rate would be 15 per cent for the new domestic manufacturing companies that are incorporated on or after 1st October 2019.

The companies that avail incentives or exemptions will have to pay the existing corporate tax at the rate of 30 per cent. The effective tax rate including surcharge is 34.94 per cent.

The Finance Minister proposed to provide a relief in the Minimum Alternate Tax (MAT) rate for these companies that continue to avail incentives or exemptions.

The existing MAT rate is 18.5 per cent which has been slashed to 15 per cent.

There will not be any surcharge on capital gains arising on sale of equity share in a company.

The surcharge was enhanced on capital gains in the present Budget. Now, the minister announced that surcharge shall not apply on capital gains on the sale of equity or a unit of an equity-oriented fund.

The minister’s announcements sought to boost growth.

As soon as the minister announced a tax cut, the BSE Sensex skyrocketed over 1,300 points. At one point, the Sensex even shot up more than 2,000 points. This is the highest in the last 10 years. The money of investors rose by ₹6 crores within one hour.

Image CreditImage by Peggy und Marco Lachmann-Anke from Pixabay (Free for commercial use)

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