Finance minister Nirmala Sitharaman on Friday slashed the basic corporate tax rates for domestic firms from 30% to 22% while for new manufacturing companies it has been cut down to 15% from 25%.
FM Sitharaman announced that a domestic company can pay income tax at 22% if they don’t seek any exemption or incentives. The effective tax rate will be 25.17% inclusive of all surcharges and cess for such domestic companies.
Over the past few weeks, the government has been announcing a series of measures to boost growth that had fallen to six-year low of 5% in June quarter. The slew of tax concessions will be applicable from April 1 and any advance tax paid by the companies will be adjusted accordingly.
Total revenue foregone for the reduction in corporate tax rate and other relief would be Rs 1.45 lakh crore per year, the finance minister said.
Soon after the announcement, Sensex soars over 1,900 points in highest single-day gain in a decade.