India Announced New Corporate Tax Structure

India Govt announces Stimulus package in the form of changing the corporate tax structure, Details of the announcement as follows as per my view and understanding.

• A domestic company can pay income tax at 22% if they don't seek any exemption or incentives

• Effective Tax Rate 25.17% inclusive of all surcharges and cess for such domestic companies

• Such companies also not required to pay Minimum Alternative Tax

• Companies availing exemptions can opt to pay tax of 22% after the exemption period is over

• Enhanced surcharge announced in Budget shall not apply on capital gains arising on sale of any securities including derivatives in the hands of foreign portfolio investors

• The govt expects to widen tax basket with lower tax rate

• Buybacks pre-July 5 exempted from buyback tax

• For new manufacturing companies that start production before March 2023 and incorporated on or after 1st October 2019, corporate tax rate brought down to 15% from 25%.

• Enhanced surcharge announced in Budget not to apply on capital gains arising on sale of equity share in a company or a unit of an equity oriented fund or a unit of a business trust liable for STT

• MAT for companies that want to use tax exemptions cut to 15% from 18.5%

• Companies can opt for lower tax rate after expiry of tax holidays and concessions that they are availing now.

NEW TAX RATE WILL BE APPLICABLE FROM THE CURRENT FISCAL WHICH BEGAN ON APRIL 1.