President Ram Nath Kovind has cleared an ordinance to give effect to amendments in the Income Tax Act, 1961 and Finance Act, 2019. To arrest a slowdown in the economy and boost growth, the government has cut the corporate tax rate for new and domestic manufacturing companies.
The companies that do not avail of any tax incentive, the tax rate will be 22%, whereas the effective corporate tax rate after surcharge will be 25.17%–inclusive of cess and surcharges, the Finance Minister Nirmala Sitharaman said. The ordinance is named Taxation Laws (Amendment) Ordinance, 2019 and comes into effect immediately.
To attract fresh investment in manufacturing and give a boost to the government’s ‘Make-in-India’ initiative, another new provision has been inserted in the Income-tax Act with effect from financial 2019-20. New manufacturing companies incorporated after October 1, 2019, will have to pay a corporate tax rate of 15%.