New Delhi: Announcing a mini-budget of sorts, finance minister Nirmala Sitharaman slashed effective corporate tax to 25.17 per cent inclusive of all cess and surcharges for domestic companies. Making the announcement at a press conference, Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
The impact sent the benchmark Sensex up more than 1,200 points and the Nifty above the psychological 11,000 mark. Among sectors, the Bank Nifty and Auto index surged three percent each.
The total taxation revenue loss due to the measure would be Rs 1.45 lakh crore, Sitharaman said, raising concerns that the government may not be able to meet its fiscal deficit target of 3.3% for 2019-20 at a time when tax revenue collections are already weak.
Here are the highlights of Nirmala Sitharaman’s fourth press conference to revive the economy:
- Corporate tax rate cut for domestic companies and new domestic manufacturing companies. The tax rate will be 22 percent without exemptions
- Effective corporate tax rate after surcharge to be 25.17 percent
- To attract investment in manufacturing, local companies incorporated after October will pay tax at the rate of 15 percent
- Effective tax for new companies shall be 17.01 percent, including cess and surcharge
- Companies enjoying tax holidays can avail concessional rates after the exemption period
- Minimum alternate tax (MAT) reduced to 15 percent from 18.5 percent for companies continuing to avail exemptions and incentives
- Enhanced surcharge to not apply to capital gains by foreign portfolio investors (FPIs)
- Buyback tax on listed companies that had announced buybacks before July 5 exempted from taxation
- Revenue foregone for reduction on corporate tax and other measures pegged at Rs 1.45 lakh crore per year