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Corporation Tax

About Corporation Tax

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What is Corporation Tax

Corporation tax is a direct tax imposed on the net income or profit that enterprises make from their businesses. Companies, both public and privately registered in India under the Companies Act 1956, are liable to pay corporation tax. This tax is levied at a specific rate according to the provisions of the Income Tax Act, 1961.
 
In a major move, Finance Minister Nirmala Sitharaman in September 2019 announced sharp cuts in the corporation tax among a series of announcements. The government decided to slash domestic corporate tax to an effective 25.17 per cent, inclusive of all surcharges and cess, in a bid to promote growth and investments amid an economic slowdown. The move would cost the exchequer Rs 1.45 trillion.
 
The government proposed to reduce the corporate tax rate from the existing 30-25 per cent (depending on the turnover thresholds) to 22 per cent (effective rate 25.17 per cent, including surcharge and cess) for all the domestic companies, subject to them not availing of a specified list of exemptions. These include, among others, exemptions available to units in special economic zones, deductions for certain scientific research expenditure, additional depreciation available on fresh investments and the losses, if any, attributable to such deductions.
 
The minimum alternate tax (MAT), introduced to facilitate the taxation of zero-tax companies, will also not be applicable to companies availing of the reduced rate of taxation.
 
Companies claiming exemptions could continue to avail of them and pay taxes at pre-amended rates, that is, 25-30 per cent. They might opt to pay taxes at lower rates at a future date. However, the option to pay taxes at the reduced rate of 22 per cent, once selected could not be changed. Significantly, where the companies continue to avail of exemptions, the MAT rate has been reduced from 18.5 per cent to 15 per cent.
 
Any new domestic manufacturing company, incorporated on or after October 1, 2019, is to be allowed to pay corporation tax at the rate of 15% (effective rate 17.01%). No MAT is to be imposed on these companies either.
 
Enhanced surcharge will not apply to capital gains on sale of any securities, including derivatives, in the hands of Foreign Portfolio Investors (FPIs).
 
The finance minister also announced an expansion in the scope of corporate-social responsibility (CSR) activities. The companies can now spend 2% of the money on state or Union govt incubators, PSUs, state universities, IITs, public-funded entities.

Latest Updates on Corporation Tax

Presently, no TDS is required on interest payable in the case of listed dematerialised securities

Updated On: 03 Feb 2023 | 6:10 AM IST

The budget pegs tax revenue at Rs 33.6 trillion, which is higher by 10.4 per cent over Rs 30.4 trillion projected in revised estimates for the current financial year (FY23)

Updated On: 01 Feb 2023 | 10:46 PM IST

From 2020-21 onwards, the Budget gave an option of a lower personal income tax regime to those earning up to Rs 15 lakh, provided they forgo some exemptions

Updated On: 29 Nov 2022 | 11:11 AM IST

Experts caution that fiscal support alone may create artificial demand and jack up prices

Updated On: 18 Oct 2022 | 9:27 AM IST

British Prime Minister Liz Truss has abandoned a planned cut to corporation tax, scrapping a key part of an economic plan that sparked weeks of market and political turmoil

Updated On: 14 Oct 2022 | 7:44 PM IST

The UK govt is expected to publish an emergency budget statement Friday outlining how it plans to slash taxes, tame soaring inflation and boost economic growth as a recession looms on the horizon

Updated On: 23 Sep 2022 | 3:42 PM IST

Net direct tax collections (net of refunds) for the current financial year have grown at 23 per cent to over Rs 7 trillion between April 1 and September 17

Updated On: 18 Sep 2022 | 9:14 PM IST

While the new corporation tax regime has drawn a good response, the personal income tax regime seems to have attracted only a lukewarm response

Updated On: 06 Sep 2022 | 9:17 AM IST

Tax dept attributed the robust growth to simplified tax regime, low rates and no exemptions

Updated On: 12 Aug 2022 | 11:28 PM IST

Budget 2022 LIVE updates: Finance Minister Nirmala Sitharaman presented the annual Union Budget 2022-23 in Parliament today. Follow Business Standard for Budget highlights

Updated On: 01 Feb 2022 | 8:37 PM IST

If much higher profits this year do not propel corporation tax revenue to a level higher than the FY19 peak, something must be wrong with corporation tax, writes T N Ninan

Updated On: 14 Jan 2022 | 10:47 PM IST

There are two ways: deliver a rapidly growing economic pie or re-assess tax policy - reform of GST, closing corporate tax loopholes, suggests T N Ninan

Updated On: 07 Jan 2022 | 10:34 PM IST

When asked about voting rights, Biden expressed support for changing the Senate filibuster tradition, which requires 60 of 100 US senators to agree on most legislation

Updated On: 22 Oct 2021 | 11:05 PM IST

Current mop-up 14.6% higher than the 2019-20 level of Rs 2.21 trillion

Updated On: 25 Sep 2021 | 1:45 AM IST

Tax, revenue and macroeconomic trends are encouraging, but more needs to be done on privatisation, clean-up of banking mess, anti-protectionism, and de-politicisation of govt bodies, writes T N Ninan

Updated On: 30 Jul 2021 | 10:29 PM IST

Listed firms paid Rs 35,000 cr more tax this year, even as corporate tax mop up fell by Rs 1 trn. Pvt ltd firms and the non-corporate sector paid Rs 1.35 trn less, which means their profits dived

Updated On: 24 Jul 2021 | 1:48 AM IST

When the times change, policy has to adapt. Why then is New Delhi so determined to not raise rates on under-taxed forms of income and wealth, questions T N Ninan

Updated On: 16 Jul 2021 | 10:32 PM IST

A tax-cut race to the bottom must end, she said

Updated On: 12 Jul 2021 | 7:49 PM IST

The landmark agreement aims to revamp rules that have allowed major companies to save billions by shifting profits to low tax jurisdictions

Updated On: 10 Jul 2021 | 9:13 PM IST

Here are the best of Business Standard's opinion pieces for Wednesday

Updated On: 07 Jul 2021 | 7:03 AM IST