Corporate Tax Rate Cut For Domestic Companies, New Manufacturing Firms
Friday, September 20, 2019 IST
Nirmala Sitharaman's announcements: The markets immediately rose after the announcement, with the Sensex surging over 1,300 points and Nifty climbing above the 10,900 mark after days of choppy trading
NEW DELHI: Finance Minister Nirmala Sitharaman said on Friday that the government has decided to lower corporate tax rate on domestic companies and new manufacturing firms, a move that is expected to boost the sluggish economy. The markets immediately rose after the announcement, with the Sensex surging over 900 points and Nifty climbing above 10,900 mark.
In a press briefing in Goa, Ms Sitharaman said the new effective tax rate will be reduced from 30 per cent to 25.2 per cent, which includes all surcharges and applicable on those companies that aren't availing any incentives.
This change will be made through an ordinance to amend the Income Tax Act, 1961, she said.
"In order to promote growth and investment, a new provision has been inserted in the Income Tax Act with effect from fiscal year 2019-20," Ms Sitharaman said.
Any advance tax paid will be adjusted, the Finance Minister said.
The measures are in addition to a series of steps announced by the government to boost demand and investments as economic growth slowed to a six-year low of 5 per cent in the quarter ended June.
The automobile sector that drives the manufacturing sector and is one of the biggest contributors to the Gross Domestic Product has been hit by several storms, from credit freeze for customers to falling demand. Many car-makers have temporarily stopped production and some have cut jobs.
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