Lok Sabha passed the Taxation Amendment Bill, 2019 on Lok Sabha on 02-12-2019.
Corporate Tax Rates slashed to be slashed to 22% for domestic companies and 15% for new domestic manufacturing companies, according to the said bill.
List of amendments:
- Section 92 BA
- Section 115 BA
- Insertion of Sections 115 BAA [Tax on income of certain domestic companies] & Sections 115 BAB [Tax on income of certain new domestic manufacturing companies]
- Section 115 JB
- Section 115 QA
- Amendment of Act No. 23 of 2019
- Amendment of Part II of First Schedule
*Please find the link for the Bill here: Taxation Amendment Bill, 2019
Additional Information with respect to the amendments issued earlier by the Finance Minister, Nirmala Sitharaman:
Salient features of the amendments made by the Ordinance are provided in the following paras:
In order to promote growth and investment, a new provision was inserted in the IT Act to provide that with effect from the current financial year 2019-20, an existing domestic company may opt to pay tax at 22% plus surcharge at 10% and cess at 4%, if it does not claim any incentive/deduction. The effective tax rate for these companies comes to 25.17% for these companies. They would also not be subjected to Minimum Alternate Tax (MAT).
In order to attract fresh investment in manufacturing and provide boost to ‘Make in India’ initiative of the Government, another provision was inserted to the IT Act, to provide that a domestic manufacturing company set up on or after 1st October, 2019 and which commences manufacturing by 31st March, 2023, may opt to pay tax at 15% plus surcharge at 10% and cess at 4% if it does not claim any incentive/deduction. The effective rate of tax comes to 17.16% for these companies. They would also not be subjected to MAT.
A company that does not opt for the concessional tax regime and avails the tax exemption/incentive shall continue to pay tax at the pre-amended rate. However, these companies can opt for the concessional tax regime after the expiry of their tax holiday/exemption period. After the exercise of the option, they shall be liable to pay tax at the rate of 22%. Further, in order to provide relief to companies which continue to avail exemptions/incentive, the rate of MAT was reduced from existing 18.5% to 15%.
In order to provide relief to listed companies, the buy-back tax on shares of listed companies introduced through the Finance Act will not apply to buy-backs in respect of which public announcement were made before 5th July, 2019.
In order to stabilise the flow of funds into the capital market, it was provided that the enhanced surcharge introduced through the Finance Act on capital gains arising on account of transfer of listed equity share or certain units that are liable to securities transaction tax will not apply. Further, it was also provided that the enhanced surcharge will not apply to capital gains income of FPIs arising out of the transfer of any security including derivatives, having a concessional tax regime.