Software development, mining, printing books that do not qualify for a lower tax rate of 15 pcs: FM
New Delhi, December 5 () Finance Minister Nirmala Sitharman said Thursday that the lowest tax rate of 15 percent for new manufacturing companies will not apply to software development, mining and book printing.
She was responding to a debate in Rajya Sabha about the Tax Law Bill (Amendment), 2019 that replaces the Tax Law Ordinance (Amendment), 2019, enacted on September 20, 2019, to reduce the tax rate basic corporate
The amendment contains a negative list of industries that will not qualify for a lower tax rate for manufacturing companies established as of October 1, 2019, but that begin production before 2023, he said.
The negative list includes software development, mining and book printing, since they are not manufacturing per se, the minister added.
Sitharaman had announced on September 20 that it would reduce the basic corporate tax rate to 22 percent from 30 percent for companies that are not seeking exemptions, and cut the rate for some new manufacturing companies to 15 percent from 25 percent. Including surcharges and terminations (levies to raise funds for specific purposes), the effective corporate tax rate will decrease by almost 10 percentage points to 25.2 percent.
The corporate tax cut followed other government measures to accelerate the slowdown in GDP growth adopted since the May general elections. These include efforts to reduce bureaucracy and boost foreign direct investment (FDI), and plans to consolidate state banks.
She said the goal of providing a lower corporate tax rate of 15 percent for new manufacturing units was to attract new investments.
New manufacturing companies have been given the option of moving to the highest tax level of 22 percent if they do not meet the conditions for lower rates, he said. Sitharaman also promised to continue implementing reforms to boost the economy. The GDP growth rate in July-September slowed to a minimum of six years of 4.5 percent. MJH ANZ ABM ABM