Companies with sales of up to Rs 400 crore to be taxed at 25%
Companies with sales of up to Rs 400 crore will be now taxed at a concessional rate of 25%, down from 30%, the rate applicable for all others, finance minister Nirmala Sitharaman announced in her union budget speech for FY20.
At present, the 25% concessional tax rate is available only to companies with sales of up to Rs 250 crore a year and to new manufacturing companies that do not avail tax incentives.
Sitharaman in her budget speech Friday said that with the latest decision, about 99.3% of all companies incorporated in the country will benefit from the 25% tax rate.
There are about 1.5 million companies in the country.
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Sitharaman also announced tax incentives for global manufacturing companies that sets up production facilities in India.
The government will invite global companies to set up mega manufacturing plants in the country in advanced industrial sectors such as solar photovoltaic cells, lithium batteries, computer serves, laptops,
semiconductors and offer investment-linked deduction under Section 35 AB of the Income Tax Act, the finance minister said.
The benefit will allow companies to lower their tax outgo by deducting the amounts invested while computing their taxable incomes.
The tax incentives to businesses come at a time when the government is attempting to improve investments and boost growth. Talking to IANS, Ficci president Sandip Somany said while the industry was happy to note the decision to raise the turnover limit from ₹250 crore to ₹400 crore for companies that would attract a corporate tax rate of 25%, he had hoped that this rate will be applicable to all companies. “Given the way tax policies are evolving, we need to be competitive if we are to attract and retain investments,” he said.
Sumit Singhania, partner, Deloitte India, told the IANS that widening the net for lower tax rate (25%) underlined progressive tax policy thinking.