In an effort to aid the domestic sector fighting economic slowdown, the Narendra Modi government on Friday announced corporate tax rates to be slashed for domestic companies and for new domestic manufacturing companies. Announcing the key measure, Union Finance Minister Nirmala Sitharaman said that, ‘to boost Make in India, another insertion inserted to Income Tax Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing an option to pay income tax at rate of 15%.’
To boost Make in India, another insertion inserted to IT Act with effect from 2019-20, which allows any new domestic company incorporated on or after 1st Oct 2019 making fresh investment in manufacturing an option to pay IT at rate of 15%: @nsitharaman https://t.co/Vhc3E0IdwM pic.twitter.com/VksCohUKTN— News Nation (@NewsNationTV) September 20, 2019
“To promote growth, a new provision has been inserted in the income tax act with effect from fiscal year 2019-20, which allows any domestic company to pay income tax at the rate of 22% subject to condition they will not avail any incentive or exemptions,” she further said. Soon after the announcement, the BSE Sensex witnessed a massive hike of 800 points. “To provide relief to companies which continue to avail incentive or exemptions, even for them we are giving a Minimum Alternate Tax (MAT) relief, the MAT rate has been reduced to 15% from the existing 18.5%,” she added. “In order to stablise the flow of funds into the capital market, it is provided that enhanced surcharge introduced in Budget of July 2019 shall not apply on capital gains arising on sale of equity share in a company or a unit of a equity oriented fund,” the Union Finance Minister said.
#VIDEO | Total revenue foregone for the reduction in corporate tax rate and other relief: 1 lakh 45 thousand crores rupees per year, says Finance Minister @nsitharaman— News Nation (@NewsNationTV) September 20, 2019
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On Thursday, the government had asked all the banks not to declare any stressed loan account to Micro, Small and Medium Enterprises (MSMEs) as NPA till March 31, 2020, citing a Reserve Bank of India order. The banks were also been asked to work on recasting their debt. Addressing a press conference after meeting the PSU bank heads, Sitharaman said that a circular have already issued by the Reserve Bank provides for stressed loan accounts of MSMEs not being declared non-performing assets or NPAs. "We have told the banks that till March 31, 2020 no stressed asset MSME will be declared an NPA. We have also requested that the bank should make an effort to sit with such stressed asset MSMEs & work it out with them to get them out of that situation," Sitharaman had said.
Last month, the Finance Minister had announced major steps to revive economic growth amid growing concern over economic slowdown. In a much-anticipated press conference, Nirmala Sitharaman announced several measures including a rollback of enhanced surcharge on foreign portfolio investors levied in the Budget. She also announced that Angel tax on start-ups has been lifted.