Diplomatist Magazine Diplomatist October 2019

IT S M D C E O N O Y ST U P I related announcements by the Indian Finance Minister in the last few weeks. Tax rates slashed 1. Domestic companies[3] • Domestic companies[4] have been provided with an option to pay income-tax in respect of total income at 22%[5] subject to the satisfaction of the following conditions: • Total income is computed without claiming prescribed deductions[6] • Total income is computed without set-oﬀ of any loss carried forward from any earlier assessment year if such loss is attributable to any of the prescribed deductions • Total income is computed by claiming depreciation, other than additional depreciation, as provided under the domestic tax laws, determined in such manner as may be prescribed[7] • The domestic companies availing the beneﬁ t of the reduced tax rate of 25% under the existing provisions[8] of the Act subject to the conditions mentioned therein have also been provided with an option[9] to opt for the lower tax rate of 22%1. • Once the domestic company opts to exercise the tax rate of 22%, such an option cannot be revoked in subsequent years. • Such companies have been excluded from the applicability of the Minimum Alternate Tax (MAT) provisions. Furthermore, MAT credit shall not be available to domestic companies exercising the option. However, a domestic company may exercise this option after utilising the available MAT credit against the regular tax payable under the taxation regime existing prior to the promulgation of the Ordinance.[10] • The option for lower tax rate of 22% must be exercised in the prescribed manner8 before the due date for furnishing the return of income from the ﬁ nancial year 2019-20 onwards. • Uniform surcharge rate of 10%. ! • Such company is not formed by splitting up or reconstruction of a business already in existence. However, an exception has been provided in case of an undertaking formed as a result of the re-establishment, reconstruction or revival of business referred to in the relevant provisions[13] of the Act. • Such company does not use any machinery or plant previously used for any purpose in India and no depreciation has been claimed[14] on the same • Such company does not use any building previously used as a hotel or convention centre • Such company is not engaged in any business other than the manufacture or production of an article or thing and research in relation to or distribution of such article or thing manufactured or produced by it • The total income of such company is computed without claiming the prescribed deductions6 • The total income is computed without set-off of any loss carried forward from any earlier assessment year if such loss is attributable to any of the prescribed deductions • The total income is computed by claiming depreciation, other than additional depreciation as provided under the domestic tax laws, determined in such manner as may be prescribed[15] • The option for lower tax rates in the case of new domestic manufacturing companies must be exercised in the prescribed manner18 before the due date for furnishing the ﬁ rst return of income from the ﬁ nancial year 2019-20. • Once the new domestic manufacturing company opts to exercise the tax rate of 15%, such option cannot be revoked in subsequent years. • Such companies have been excluded from the applicability of MAT provisions. • Uniform surcharge rate of 10%. The Government is leaving no stone unturned to stimulate the “Make in India” initiative, attract investments from across the globe by boosting investor confi dence, improve competitiveness and positioning India as one of the most competitive economies in the world. 2. New domestic manufacturing companies[11] • Domestic manufacturing companies have been provided with an option to pay tax at 15%[12] subject to the satisfaction of the following conditions: • Such company is incorporated on or after 01 October 2019 • Such company commences manufacturing on or before 31 March 2023 3. MAT • The tax rate under the MAT provisions has been reduced from 18.5% to 15% for all domestic companies other than those opting for the reduced rates of 22% or 15% (in which case MAT provisions are not applicable). 4. Others Roll back of enhanced surcharge rates on capital gains[16] The Ordinance has repealed the enhanced surcharge rates Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 10 • October 2019, Noida • 57

Diplomatist Magazine Diplomatist October 2019 | Page 57