In bid to lure fresh investments into the economy the Government has slashed basic corporate tax rate to 22% from 30% while for new manufacturing companies it has been cut down to 15% from 25%. The move is estimated to cost the state exchequer ?1.45 lakh crore per year.

Key Points:

• New provision inserted in the income tax act with effect from fiscal year 2019-20, that allows any domestic company to pay income tax at the rate of 22% subject to condition they will not avail any incentive or exemptions.
• Manufacturing companies set up after October 1 to get option to pay 15% tax. Effective tax rate for new manufacturing firms to be 17.01% inclusive of surcharge & tax.
• Higher surcharge will also not apply on capital gains on sale of security including derivatives held by FPIs
• To provide relief to companies availing of concessions and benefits, a MAT relief by reducing it from 18% to 15%
• Listed companies that have announced buyback before July 5, 2019, tax on buyback of shares will not be charged.
• CSR 2% spending to include government, PSU incubators and public funded education entities, IITs.

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