Finance Minister Nirmala Sitharaman today announced a lowering of the corporate tax rate on domestic companies to 22 per cent if it is not availing any exemptions and incentives. These companies will also not be required to pay any Minimum Alternate Tax (MAT). Effective tax rate, in this case, would be 25.17 per cent, including cess. The new domestic companies making fresh investment in manufacturing will have to pay merely 15 per cent corporate tax rate if such firm commences their production on or before March 31, 2023. Notably, these companies would also get exemption from MAT.
As the Finance Minister announced the reduction in Corporate tax, Zee Business informs you as to how these measures will benefit the economy, and what are the sectors, and the companies which will benefit the most.
1. The Oil and gas sector is likely to get maximum profit as companies like ONGC, which currently pay about 41% tax, will now have a direct savings of 12%. Further, other companies like IOC, BPCL and HPCL will also get a similar benefit.
2. Similarly, in the real estate sector also rebate will extend benefit. The big real estate firm, DLF, pays about 42-43% tax, post this announcement, it will save about 16-17% tax.
3. Consumer durables are another sector wherein companies like Dixon Technologies, CG Consumer and Havell will get a lot of benefits.
4. The companies belonging to Capital goods like Thermax and ABB has been paying 36% tax, but they will be able to save 11% tax.
5. The companies with consumer products like Asian Paints, Britannia, ITC, HUL and Titan will save taxes from 3.5 to 10% after the rebate in the Corporate Tax.
Notably, the total revenue foregone for the reduction in corporate tax rate and other relief is estimated to be Rs 1,45,000 crore. This is the biggest announcement so far by the Modi 2.0 government to fight the slowdown.
[“source=zeebiz”]
