The corporate rate has been slashed to 22% if companies choose not avail exemptions and incentives. The effective tax rate would be 25.17% after including all surcharges. Also, these companies would not be required to pay Minimum Alternative Tax (MAT).
Push to Make-in-India: Domestic companies incorporated on or after October 1 and are making fresh investments in manufacturing are allowed to pay 15% tax if the exemptions are not availed. The companies must commence production before the end of FY23. In addition, they are not required to pay MAT.
Companies seeking exemption and incentives can pay MAT of 15%, which was earlier 18.5%.
The sale of equity shares and equity-oriented mutual funds will not attract additional surcharge on capital gains tax for individuals and HUFs. Earlier, individuals earning Rs 2-5 crore and those earning more than Rs 5 crore had to pay a surcharge of 25% and 37%, respectively. Now, this has been revised and a higher rate of surcharge shall not apply on capital gains.
Companies now have permission to use 2% CSR spending on incubators funded by IITs, NITs, national laboratories, and autonomous bodies.
Tax on share buyback will not be levied for those listed companies that made the announcement before July 5.
These new measures will have an impact of Rs 1.45T on government’s exchequer on an annual basis.