Diplomatist Magazine Diplomatist October 2019 | Page 57
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