Brushing aside the opposition criticism against fresh tax related initiatives announced by the government, Prime Minister Narendra Modi on Friday said the new moves will “give a great stimulus” to the flagship ‘Make in India’ programme, attract private investment and also create more jobs.
The government announcement will also result in a “win-win (situation) for 130 crore Indians”, he said.
“The step to cut corporate tax is historic,” Prime Minister tweeted within hours after Finance Minister Nirmala Sitharaman announced in Panajim in Goa that under the Taxation Laws (Amendment) Ordinance 2019, a new provision has been inserted in the Income-tax Act that will allow any domestic company an option to pay income-tax at the rate of 22 per cent subject to conditions.
Prime Minister wrote in the micro blogging site that the new moves will “give a great stimulus to Make in India (programme), attract private investment from across the globe, improve competitiveness of our private sector, create more jobs and result in a win-win (situation) for 130 crore Indians”.
Prime Minister maintained announcements by his government to boost economy in last few weeks “clearly demonstrate” that the NDA dispensation under him is leaving “no stone unturned” to make India a better place to do business.
He also said the fresh initiatives by his government will improve opportunities for all sections of society and increase prosperity to make India a $ 5 Trillion economy.
Earlier in the day, in order to attract fresh investment in manufacturing and provide boost to ‘Make-in-India’ initiative, a new provision has been inserted in the Income-tax Act with effect from FY 2019-20 which allows any new domestic company incorporated on or after 1st October 2019 making fresh investment in manufacturing, an option to pay income-tax at the rate of 15 per cent.
“This benefit is available to companies which do not avail any exemption or incentive and commences their production on or before 31st March, 2023. The effective tax rate for these companies shall be 17.01 per cent inclusive of surcharge and cess. Also, such companies shall not be required to pay Minimum Alternate Tax,” an official statement said.
A company which does not opt for the concessional tax regime and avails the tax exemption or incentive shall continue to pay tax at the pre-amended rate. However, these companies can opt for the concessional tax regime after expiry of their tax holiday or exemption period. After the exercise of the option they shall be liable to pay tax at the rate of 22 per cent and option once exercised cannot be subsequently withdrawn, it said.
Further, in order to provide relief to companies which continue to avail exemptions or incentives, the rate of Minimum Alternate Tax has been reduced from existing 18.5 per cent to 15 per cent.