The government has slashed basic corporate tax rate to 22% from 30% while for new manufacturing companies it has been cut down to 15% from 25%. Over the past few weeks, the government has been announcing a series of measures to boost growth that had fallen to six-year low of 5% in June quarter.
- The tax rates are slashed by following an amendment in the Income-tax Act 1961 and the Finance (No. 2) Act 2019.
- The effective rate for domestic companies with inclusive surcharge and cess shall be 25.17%.
- The effective rate for new domestic companies with inclusive surcharge and cess shall be 17.01%.
- The new domestic companies are those companies that are incorporated on or after 1st October 2019 and will commence production on or before 31st March 2023.
- The FinMin has also said that it will expand the scope of CSR 2 % spending.
- The decisions have been taken to increase industrial growth and investment, boost ‘Make In India’ projects and to promote research in the country.
- Rs. 1.45 lakh crore is the estimated total revenue foregone for the reduction in corporate tax rate and other relief.