15 per cent tax rate on new companies to boost manufacturing

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Updated: September 21, 2019 5:42:33 AM

The minister said foreign investors could avail of the new tax rates, provided they had an establishment in the country or were investing equity into an Indian firm.

manufacturing , manufacturing sector, manufacturing sector india, china, corporation tax rate, corporation tax cut, corporate tax, corporate tax rate, corporate tax in india, corporate tax rate india, Narendra Modi, nirmala sitharaman, financial express, financial express opinion, corporate tax rate 2019At a time when the ongoing trade war between the US and China has lent an air of uncertainty and disrupted investment decisions, the move is expected to give global firms a compelling incentive to invest in the country.

In a move that is set to make India an attractive investment destination, the government on Friday issued an ordinance bringing down corporate tax rate for new manufacturing companies to 15% from 25%.

The move brings India’s effective corporate tax rates at par with, or in some cases, lower than its Asian peers. In a bid to attract fresh investment in manufacturing and provide the ‘Make in India’ campaign a boost, finance minister Nirmala Sitharaman said the effective tax rate for new manufacturing firms set up post October 1, 2019 and starting operations by March 31, 2023 will be 17.01% against 29.1% as of now.

Commenting on the announcement, Frank D’Souza, Partner and Leader Corporate and International Tax, PwC India, said: “The base rate of 15% for new manufacturing units makes India competitive and attractive for new investments and boost Make in India initiative.”
The effective interest rate is inclusive of surcharges and cess. However, the benefit of 15% corporate tax is only available to firms that do not avail any exemptions or incentives. Such firms will also be exempt from Minimum Alternate Tax (MAT).

 

Corporate tax rate cut decoded! Why FM Sitharaman’s announcement is a Diwali bonanza for economy

The minister said foreign investors could avail of the new tax rates, provided they had an establishment in the country or were investing equity into an Indian firm.

At a time when the ongoing trade war between the US and China has lent an air of uncertainty and disrupted investment decisions, the move is expected to give global firms a compelling incentive to invest in the country.

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