The government today lowered the corporate tax for new manufacturing units at 25 per cent with a view to promote industrial activity and generate jobs.
With regard to small units having a turnover of Rs 5 crore, the corporate tax rate has been reduced from 30 per cent to 29 per cent, Finance Minister Arun Jaitley said in the Budget 2016-17 tabled in the Lok Sabha.
This is a part of exercise to bring down corporate tax rate in a phased manner from the existing 30 per cent to 25 per cent over a period of four years beginning next fiscal.
“In the first phase, I propose following two changes in the corporate tax rate,” he said.
“The new manufacturing companies which are incorporated on or after March 1, 2016 as proposed to be given an option of being taxed at 25 per cent plus surcharge plus cess provided they don’t claim any profit link, investment link deduction and don’t claim any investment allowance at accelerated depreciation,” he said.
This will help incentivise setting up of new manufacturing units and generate employment.
“I also propose to lower the corporate income tax rate for next financial year for relatively small enterprise companies with a turnover not exceeding 5 crore to 29 per cent plus surcharge plus cess,” he said.
The panel had said that its endeavour has been to address difficulties and challenges expressed by various stakeholders and also to further the government’s objective of improving ase of doing business, encouraging start-ups and the need for harmonising various laws.
The suggestions also included measures to bring in a greater clarity in the Act and Rules and harmonising the various provisions thereof while making its recommendations.
The panel had proposed changes in 78 sections of the Companies Act, 2013, which along with consequential changes, would result in about 100 amendments to the Act.
Approximately 50 amendments to the Rules were also proposed. The recommendations cover significant areas of the Act, including definitions, raising of capital, accounts and audit, corporate governance, managerial remuneration, companies incorporated outside India and offences/penalties.
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