A bill that provides for inserting a new provision in the Income Tax Act to provide that a company may opt to pay tax at 22 per cent if does not claim any incentive or deduction was introduced in Lok Sabha on Monday.
The Taxation Laws (Amendment) Bill, 2019 seeks to replace an ordinance brought by the government earlier. It was introduced by Finance Minister Nirmala Sitharaman.
The statement of objects and reasons of the bill states that many countries had reduced corporate income tax to attract investment and create employment opportunities and it necessitates similar changes in the tax payable by the domestic industry to make Indian industry more competitive.
The ordinance inserted a new provision in the IT Act that from this fiscal an existing domestic company may opt to pay tax at 22 per cent plus surcharge at 10 per and cess at 4 per cent if it does not claim any incentive.
The effective tax rate for these compes comes to 25.17per cent for these compes. They would also not be subjected to Minimum Alternate Tax (MAT).
The ordinance provided that a domestic manufacturing company set up on or after October 1, 2019, and which commences manufacturing by March 31, 2023, may opt to pay tax at 15 per cent plus surcharge at 10 per cent and cess at 4 per cent if it does not claim any deduction. The effective rate of tax comes to 17.16 per cent for these compes. They would also not be subjected to MAT.
( With inputs from ANI )