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  • Corporate Tax Rate Cut by Government

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    Kumar Mohit
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    The document summarizes the Indian government's recent cuts to corporate tax rates in September 2019 to boost the country's slowing economy. The key points are: 1) Corporate tax rates were cut from 30% to 22% for domestic companies not availing any exemptions, and to 15% for new domestic manufacturing companies. 2) This will result in an estimated revenue loss of 1.45 lakh crore rupees for the government but could help arrest the economic growth slowdown. 3) The government may use the 1.76 lakh crore rupees surplus received from the RBI to fund the revenue loss and keep the fiscal deficit intact.

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    Corporate tax rate cut by government

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    The document summarizes the Indian government's recent cuts to corporate tax rates in September 2019 to boost the country's slowing economy. The key points are: 1) Corporate tax rates were cut from 30% to 22% for domestic companies not availing any exemptions, and to 15% for new domestic manufacturing companies. 2) This will result in an estimated revenue loss of 1.45 lakh crore rupees for the government but could help arrest the economic growth slowdown. 3) The government may use the 1.76 lakh crore rupees surplus received from the RBI to fund the revenue loss and keep the fiscal deficit intact.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    26 views5 pages

    Corporate Tax Rate Cut by Government

    Uploaded by

    Kumar Mohit
    The document summarizes the Indian government's recent cuts to corporate tax rates in September 2019 to boost the country's slowing economy. The key points are: 1) Corporate tax rates were cut from 30% to 22% for domestic companies not availing any exemptions, and to 15% for new domestic manufacturing companies. 2) This will result in an estimated revenue loss of 1.45 lakh crore rupees for the government but could help arrest the economic growth slowdown. 3) The government may use the 1.76 lakh crore rupees surplus received from the RBI to fund the revenue loss and keep the fiscal deficit intact.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 5

    Corporate Tax Rate

    Government cuts rates again to


    tackle slowdown
    September 2019

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    Corporate Tax cut again

    30% 30%
    Other Other
    22%
    corporates corporates
    25% 25% ALL
    corporates 15%
    Turnover up Turnover up
    (no
    to Rs.250 cr to Rs.400 cr exemption/ New manufacturing
    incentive companies
    availed)
    Pre FY20 Budget Budget 2019-20 NOW in Sep 2019

    Effective Tax Rate 34.94%


    25.17%
    & 17.01%
    Source: www.timesofindia.indiatimes.com

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    Details of New Corporate Taxes
    Action Minimum Alternate Tax Reason
    (MAT) Status
    22% (effective 25.17%) is applicable on To boost investment by private
    exempt from MAT
    domestic corporates that do not avail any sector so as to revive growth in
    incentives or exemptions the economy
    15% (effective rate 17.01%) is applicable for
    new manufacturing firms set up after
    exempt from MAT To boost manufacturing in India
    October 1, 2019 and commencing
    under “Make in India”
    operations by March 31, 2023
    Exempt from MAT requirement
    No benefit of new tax rate as
    already getting concessions for
    30% (old tax rates) for companies availing MAT rate reduced to 15%,
    other reasons but MAT rate
    any tax exemption/incentive from 18.5%
    relaxed to help boost
    investment

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    Other sops announced

    • Rolled back increased surcharge introduced in Union Budget


    FY20 on capital gains arising on sale of equity share or units of
    funds

    • No enhanced surcharge on capital gains arising on sale of any


    security including derivatives, in the hands of FPIs

    • Tax on Buyback of shares (as announced in Union Budget FY20)


    also rolled back

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    What this means for the government and economy?
    Lower tax revenue by
    Rs.1.45 lakh crore; Government could use
    the Rs.1.76 lakh crore of
    remember that corporate tax
    surplus received from
    is the largest direct tax
    RBI to fund this revenue
    revenue source
    loss; thereby keeping
    fiscal deficit intact

    • But can arrest the deceleration in the


    economic growth
    • Attract foreign inflow that started to
    flee after new taxes were introduced
    in Budget

    Source: PIB Source: Indiatoday.in

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