Finance Minister Niramala Sitharaman addressing her fourth press conference in Goa to revive the economy and boost investments. The FM addressing a long pending demand of India Inc. announced a cut in the corporate tax rate for domestic companies and new domestic manufacturing companies along with other fiscal relief measures. This decision has sent the benchmark indices BSE Sensex and NSE Nifty to zoom by more than 1900 points and 570 points respectively.
Here are the key takeaways:
- Corporate tax rate has been slashed to 22 per cent for domestic companies not availing any incentives/exemptions; the earlier rate was 30 per cent.
- Effective tax rate for such companies now stands at 25.17 per cent including cess and surcharge; earlier it was 34.94 per cent
- New domestic companies incorporated on or after Oct 1, 2019, making fresh investment in manufacturing can pay income-tax at a rate of 15 pc; the earlier rate was 25 pc
- Enhanced super-rich tax on capital gains on sale of share in hands has been removed
- Enhanced surcharge will also not apply to capital gains on sale of security in hands of foreign portfolio investors (FPIs)
- Changes in Income Tax Act, 1961 and Finance Act, 2019 made through an ordinance.
- Revenue foregone for reduction in corporate tax and other relief is estimated at Rs 1.45 lakh crore.