Tax reduction to attract investments and generate jobs: Minister of Finance
NEW DELHI: Finance Minister Nirmala Sitharaman in Lok Sabha said on Monday that the government's decision to reduce the corporate tax rate was aimed at attracting investments and creating jobs.
The government's decision was also necessary to attract investment from multinational companies, which wish to change China's operations in view of the ongoing Sino-US trade war, he said while moving the Tax Law Bill (Amendment), 2019 for consideration and approval. .
The bill seeks to replace the ordinance that was promulgated by the president in September.
The government through the ordinance reduced the corporate tax rate from 30 percent to 22 percent, and for new manufacturing companies to 15 percent. However, companies that opt for lower tax rates will not be entitled to claim any refund or deduction.
We believe that we will attract investment by reducing the tax rate, he said while stressing that several neighboring countries and emerging nations have reduced tax rates to attract investment.
In addition, he said that with the reduction of the corporate tax rate, the effective rate will be reduced to 25.17 percent from 34.94 percent.
The effective tax rate for new manufacturing companies, which will be entitled to a 15 percent rate, would be 17.16 percent, he said.
In addition to other things, the bill has also provided a negative list of companies that will not be entitled to a concessional tax rate of 15 percent.
Companies engaged in the development of software mining, the conversion of marble blocks into slabs, the bottling of gas cylinders, the printing of books and film films will not be treated by new manufacturing entities for concessional tax purposes.
The government, he said, has also partially withdrawn the surcharge announced in the budget to attract investment from foreign portfolio investors (FPIs).