New Delhi: Prime Minister Narendra Modi on Friday termed as a “historic step” the government’s decision to slash corporate tax rates for domestic companies.
“The step to cut corporate tax is historic. It will give a great stimulus to #MakeInIndia, attract private investment from across the globe, improve the competitiveness of our private sector, create more jobs and result in a win-win for 130 crore Indians,” he said in a tweet.
“The announcements in the last few weeks clearly demonstrate that our government is leaving no stone unturned to make India a better place to do business, improve opportunities for all sections of society and increase prosperity to make India a $5 Trillion economy,” Modi added.
Today, the government slashed effective corporate tax to 25.17 per cent inclusive of all surcharges and cess, in a bid to promote growth and investments amid an economic slowdown that would cost the exchequer Rs 1.45 lakh crore. The effective corporate tax rate earlier was 30 per cent.
Making the announcement, Finance Minister Nirmala Sitharaman said the new tax rate will be applicable from the current fiscal which began on April 1.
She added that new domestic manufacturing companies incorporated after October 1 can pay income tax at a rate of 15 per cent without any incentives. The effective tax rate for new manufacturing companies will be 17.01 per cent inclusive of all surcharge and cess.
As per the report, the companies can opt for lower tax rate after the expiry of tax holidays and concessions that they are availing now.