The Lok Sabha on Monday passed the Bill that provides for inserting a new provision in the Income Tax Act that a company may opt to pay tax at 22 per cent if does not claim any incentive or deduction.
The Taxation Laws (Amendment) Bill, 2019 was passed after a reply by Finance Minister Nirmala Sitharaman, who expressed confidence in the growth rate picking up after it came down to 4.5 per cent in the July- September quarter.
The Bill seeks to replace an ordinance brought by the government earlier.
She said a new provision in the I-T Act from this fiscal provides an existing domestic company to opt to pay tax at 22 per cent plus surcharge at 10 per and cess at 4 per cent if it does not claim any incentive.
The effective tax rate for these companies comes to 25.17per cent. They would also not be subjected to the Minimum Alternate Tax (MAT).
The Bill provides that a domestic manufacturing company set up on or after October 1, 2019, and which commences manufacturing by March 31, 2023, may opt to pay tax at 15 per cent plus surcharge at 10 per cent and cess at 4 per cent if it does not claim any deduction. The effective rate of tax comes to 17.16 per cent for these companies.
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