Union Finance Minister Nirmala Sitharaman has announced that the Cabinet has passed an ordinance on reduced effective corporate tax rate on all tax and surcharges for domestic and new manufacturing companies on Friday.
FM Sitharaman said, the new corporate tax rate will be effective from October 1 with reduction of income tax revised at 22% (down from 30%) for a domestic company.
Meanwhile, the new domestic manufacturing companies can pay corporate tax at 15 percent revised from earlier 25% without any incentive.
The effective tax rate will be 25.17 percent including all cess and surcharges.
The Union FM also said, the Minimum Alternate Tax (MAT) has been revised to 15% (down from 18.5%) for companies with incentives.
The exchequer will bear an estimated revenue of rupees 1.45 lakh crore.
The Union FM said, this is a major tax reduction move in order to keep the economy afloat and will help in more revenue generation.