Union Finance Minister Nirmala Sitharaman on Tuesday announced a slew of measures for the corporate sector which includes cutting corporate tax rates to 22 per cent for domestic companies and 15 per cent for new domestic manufacturing units. The Rs 1.45 lakh crore stimulus packages for the corporate sector saw quick positive response from the stock markets.
She made the announcement in Panaji prior to the Goods and Services Tax Council meeting being attended by State Finance Ministers on Friday. There would be another briefing after the meeting. This was her fourth in the wake of concerns over economic slowdown.
The current effective tax rate for companies is 30 per cent which has been slashed by 8 per cent. For new manufacturing companies the tax rate has been brought down to 15 per cent from was 25. There will be no sunset clause for the tax benefit to new manufacturing companies and the total a new company would have to pay was roughly 17 per cent.
It was also proposed to expand the scope of spending 2 per cent profits on corporate social responsibility (CSR) for incubators and research grants. The total revenue forgone through this would be around Rs 1.45 lakh Crore.
For new companies incorporated after October 1, and commencing production by March 31, 2023, the income tax rate will be 15 per cent with an effective rate of 17 per cent. Such firms were exempted from paying MAT.
The MAT rate has been cut to 15 per cent from 18.5. A part of stabilising the flow of funds into capital markets, the enhanced surcharge levied in the Budget would not apply on capital gains arising out of sale of equity shares in a company or a unit of a business trust or an equity fund liable to Securities Transaction Tax (STT), she said.
On fiscal deficit, she said, "Economic buoyancy will itself generate enough reasons for better revenue generation. We will definitely be having a positive impact on the revenue collection."
The new announcements would have a positive impact on revenue collection, Sitharaman said. "We want to have more investments in Make In India. This will mean more investment," she added.
Regarding resuming mining activity in Goa, the Group of Ministers had met and was discussing various options, the Minister said. "We will be taking all concerns on board to reconcile how the situation is now and how to take it forward," she added.
In quick response to the announcements to boost corporate earnings, Sensex rose by over 2,000 points and Nifty surged to 11,303 points by afternoon.