Finance Minister Nirmala Sitharaman announced new measures on 20 Sept 2019 to boost the economy. This move is taken because of GDP fell down to a six-year low of 5% in the June quarter. Addressing the press conference Finance Minister said the revenue foregone on reduction on corporate tax & other measures will be Rs 1.45 lakh crore annually. You can check the Finance Report here.
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Key takeaways from Sitharaman’s press conference:
- Revenue foregone on reduction on corporate tax and other measures will be Rs 1.45 lakh crore per year.
- The finance minister has cut the corporate tax rate to 22% from 30% excluding surcharge & cess. Effective corporate tax rate after surcharge is to be 25.17%
- Effective tax for new companies shall be 17.01% including cess & surcharge.
- Minimum Alternate Tax (MAT) reduced to 15% from 18.5% for companies contributing to avail exemptions and incentives
- To attract investment in manufacturing local companies incorporated after 1 Oct 2019 and starting production till 31 March 2023 will pay tax at the rate of 15%.
- Enhanced surcharge to not apply to capital gains by foreign portfolio investors (FPIs).
- Companies enjoying tax holidays can avail concessional rates after the exemption period.
- Buyback tax on listed companies that had announced buybacks before July 5 exempted from taxation.
Government has taken a bold step which will boost investment. This announcement deemed to be a big boost for corporate India. This move should help companies report better earnings growth this year and also revive Capex cycle and boost new investments.
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