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Nirmala Sitharaman’s “big economic gifts” to business ecosystem; Check highlights

Addressing a meeting today, Union Finance Minister Nirmala Sitharaman announced a slew of economic reforms to boost the economy. The leader offered many fiscal measures for promoting growth.

Highlights of the Announcements-

1. Reduction of Corporate tax from 30 percent to 22 percent. For domestic companies, final corporate tax will be 25.17 percent inclusive of all cess and surcharge. Earlier it used to stand at 34.94 percent. New tax rate structure will be applicable from the current fiscal which started on April 1. Such companies have also been exempted from MAT (Minimum Alternate Tax).

2. New domestic manufacturing companies incorporated on or after Oct 1, 2019, can pay income-tax at a rate of 15 percent. The earlier rate was used to be 25 percent. The effective rate after including cess and surcharges will be 17.01 percent. These companies are not required to pay MAT too.

3. MAT rate has been brough down from 18.5 percent to 15 percent.

4. Enhanced super-rich tax on capital gains on the sale of shares has been thrown away. Enhanced surcharge applied on Foreign Portfolio Investments has also been removed.

5. The ambit of CSR (Corporate Social Responsibility) activities has been expanded.

6. The listed companies that had announced buyback before July 5 will be exempted from the Buyback tax.

7. Companies enjoying tax holidays can now avail concessional rates after the exemption period.

It has been reported that after the reduction of corporate tax, the estimated loss of revenue will be around Rs. 1.45 lakh crores. The announcements have made the business sector very happy. To adjust all the announced changes,  Income Tax Act, 1961 and Finance Act, 2019 have been amended through an ordinance.

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Saurabh Parmar

Digital Journalist (Specializing in Indian affairs & Contemporary Political development)

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