In a major fiscal booster, Finance Minister Nirmala Sitharaman on Friday announced deduction on effective corporate tax to 25.17 per cent, inclusive of all cess and surcharges for domestic companies. Addressing a press conference, Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
The revenue foregone on reduction in corporate tax and other relief measures will be Rs 1.45 lakh crore annually, Sitharaman said.
This, she said is being done to promote investment and growth.
In effect, the corporate tax rate will be 22 per cent for domestic companies, if they do not avail any incentive or concession.
The changes in the Income Tax Act and Finance Act will be made effective through an ordinance.
The minister also said companies opting for 22 per cent income tax slab would not have to pay minimum alternate tax (MAT).
Sitharaman further said, new domestic manufacturing companies incorporated after October 1, can pay income tax at a rate of 15 per cent without any incentives.
Meaning, the effective tax rate for new manufacturing companies will be 17.01 per cent inclusive of all surcharge and cess.
Sitharaman further said companies can opt for lower tax rate after the expiry of tax holidays and concessions that they are availing now.
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Sitharaman slashes corporate tax to 25.17 per cent
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