Diplomatist Magazine Diplomatist October 2019

IT S M D C E O N O Y ST U P I ! The tax rate cut, especially in view of the current economic conditions, do seem to be a momentous change and point towards Government’s keenness to push structural reforms for higher growth rate. of 25%/ 37% (as the case may be) for non-corporate taxpayers deriving capital gains from the transfer of listed equity shares, units of equity-oriented funds, and business trusts when such transfers are subject to securities transaction tax; and foreign portfolio investors deriving capital gains from the transfer of any securities including derivatives. Grandfathering of buy-back tax Tax on buy-back of shares (being shares listed on a recognised stock exchange) not applicable for shares for which the public announcement was made before 05 July 2019.[17] The Story ahead With this move, India’s tax rates are now at par with its competing Asian peers. 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. The tax rate cut, especially in view of the current economic conditions, do seem to be a momentous change and point towards Government’s keenness to push structural reforms for higher growth rate. Introduction of even lower tax rate of 15% for new domestic manufacturing companies is likely to beneﬁ t foreign players looking to set up manufacturing facilities in India and give a boost to the “Make in India” initiative of the Government. Such tax rate cut coupled with measures to boost consumer demand, supply-side reforms and other structural reforms should contribute to the robust growth of the Indian economy. Think about While the option of lower tax rates looks attractive, it may be relevant for the taxpayers to undertake a fact-speciﬁ c impact analysis of opting for a lower rate and giving up certain incentives and beneﬁ ts vis-à-vis continuing in the old regime. This becomes important as the option is irreversible once selected.  References: [1] Plus applicable surcharge and health and education cess [2] Such turnover of a domestic company has to be seen for the fi nancial year 2017-18 [3] Section 115BAA of the Act [4] Domestic company means an Indian company, or any other company which, in respect of its income liable to tax under this Act, has made the prescribed arrangements for the declaration and payment, within India, of the dividends (including dividends on preference shares) payable out of such income [5] Eﬀ ective tax rate of 25.17% [6] Following are the prescribed deductions: - - Section 10AA of the Act relating to SEZ - Additional depreciation allowance under section 32(1) (iia) of the Act - Section 32AD of the Act – Deduction for investment in new plant and machinery in notifi ed backward States - Section 33AB of the Act – Tea/ coﬀ ee/ rubber development allowance - Section 33ABA of the Act – Site restoration fund - Sections 35(1) (ii), (iia), (iii) and 35(2AA), (2AB) of the Act – certain scientifi c research expenditure - Section 35AD of the Act – Deduction in respect of expenditure on specifi ed business - Section 35CCC of the Act – Expenditure on agricultural extension project - Section 35CCD of the Act – Expenditure on skill development project - Deduction under Part C of Chapter VIA other than section 80JJAA of the Act (deduction in respect of employment of new employees) [7] Not yet prescribed [8] Section 115BA of the Act – The section provides for a reduced tax rate of 25% to certain domestic manufacturing companies subject to the conditions specifi ed therein [9] Corrigendum to the Taxation Laws (Amendment) Ordinance, 2019 dated 26 September 2019 [10] Circular No. 29/ 2019 dated 02 October 2019 issued by the Central Board of Direct Taxes [11] Section 115BAB of the Act [12] Eﬀ ective tax rate of 17.16% [13] Section 33B of the Act [14] Relaxation to the extent of 20% of the total value of the machinery or plant used by the company allowed [15] Not yet prescribed [16] Introduced through the Finance (No.2) Act, 2019 [17] The Union Budget 2019 was announced on 05 July 2019 * Authored by Noopur Agashe, Executive Director, Corporate and International Tax, PwC Co-authored by Dipesh Panicker, Manager, Corporate and International Tax, PwC and Lovnish Sahni, Associate, Corporate and International Tax, PwC 58 • Extraordinary and Plenipotentiary Diplomatist • Vol 7 • Issue 10 • October 2019, Noida

Diplomatist Magazine Diplomatist October 2019 | Page 58