Finance Minister Nirmala Sitharaman today proposed to slash the corporate tax rates for domestic companies and new manufacturing companies, apart from other benefits, which could cost the government Rs 1.45 lakh crores.
A company will have the option to pay income tax at 22 percent if they don't avail any exemptions or incentives from FY20. Effective tax for these companies the rate would be 25.17 percent inclusive of all surcharge and cesses.
This brings down the corporate rates from the present 30 per cent, while for new manufacturing companies it has been cut down to 15 per cent from 25 per cent.
"To attract fresh investments and boost Make In India, any new domestic manufacturing company incorporated after Oct 1, 2019 has the option to pay 15 percent tax. This is also applicable to companies which don't avail any exemption", the Finance Minister stated.
Benefits for listed companies
Listed companies that have announced buyback before July 5, 2019, tax on buyback of shares will not be charged higher surcharge.
Apart from this the government also announced that the higher surcharge on capital gains on sale of security including derivatives held by FPIs will not apply. T
Benefits on CSR
The Finance Minister also annnounced that the government has decided to expand to spend CSR of 2 percent on incubators run by state or central government, PSUs, contribution to public funded universities, laboratories, etc.
Sensex zooms 1,300 points
Stock markets zoomed following the announcements with the Nifty rallying 300 points, while the Sensex zoomed 1,300 points. It is likely that the markets would continue to rally following the measures.