Lok Sabha passes Bill to effect corporate tax reduction

The Lok Sabha on Monday passed a Bill to replace an Ordinance for effecting the reduction of corporate tax rates.

Taxation Laws (Amendment) Bill, 2019, will amend the Income Tax Act 1961 and the Finance (No 2) Act 2019. It replaces the Ordinance which was promulgated by the President in September.

In the biggest reduction in 28 years, the government in September slashed corporate tax rates up to 10 percentage points as it looked to pull the economy out of a six-year low growth with a Rs 1.45 lakh crore tax break.

Base corporate tax for existing companies has been reduced to 22 percent from 30 percent, and to 15 percent from 25 percent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023.

The companies opting for lower tax rates, however, will not be entitled to claim any rebate or deductions.