Govt cuts effective tax rate to 25.17%

The Government of India announced a cut in effective corporate tax inclusive of cess to 25.17% for domestic companies. Hon’ble Finance Minister Smt Nirmala Sitharaman made this announcement today, assuring that this cut will be effective from April 1, 2019. This implies a revenue loss of Rs 1.45 lakh crore to the government annually, but the Minister said that this was being done to promote investment and growth. 

Manufacturing companies that are established after October 1 will get the option to pay 15% tax. Hence the effective tax rate for these firms will be 17.01%. For any other domestic firm in India, the government has now provided an option to pay income tax at 22%, provided they do not claim any incentives or exemptions. Listed companies that have announced buyback before July 5 will not be charged tax on buyback of shares. Other announcements announced apply to capital gains on sale of securities, equity sale or equity oriented funds and MAT. Changes in the Income Tax act and Finance Act will be made effective with an ordinance. 

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