After GST council meet in Goa, it has been decided to slash the corporate tax. Finance minister Mrs. Nirmala Sitaraman, tweets “total revenue forgone for a reduction on corp tax & other is ₹1.45 lakh per year”.
How much corporate tax has been slashed?
Basic corporate tax has been cut down to 22% from 30% and for new Manufacturing companies, slashed down to15% from 25%.
Why this step has been taken? What did the finance minister say?
Due to economic slowdown, which has fallen to six years low in the June quarter that is 5%. Jobs were going away, Indian economy has been slowed down. Finance minister Mrs. Sitaraman said, “with effect financial year 2019-20. any domestic company has an option to pay income tax at the rate of 22%, subject to the condition that they will not avail any exemption”. She also added that companies who are under 22% slab are not supposed to pay MAT(minimum alternative tax). She has given new manufacturing companies (domestic), to pay 15% tax, means, the effective tax rate will be 17.01% including cess and surcharges.
Modi government also, relieved on STT(Security transaction tax) by not levying enhanced surcharge which was in budget.
What next after this?
It will promote investment in the economy which will create new jobs. Through an ordinance changes will be made to income tax act and finance act.