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It’s good news for Indian businesses as corporate tax is slashed, alongside the announcement of other fiscal reliefs!

2nd October 2019

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MGI Worldwide accounting network’s most recent member, C.R. Sharedalal & Co., has shared with us some exciting news that is going to come as a welcome development for Indian-based companies.

Coinciding with India’s Independence Day, the Prime Minister unveiled his ambition to see India become a “$5 Trillion” economy by the year 2025.

This statement comes at a time when India’s GDP growth rate is down to just 5%, marking its slowest movement in six years, but rather than focus on the negatives, the government can be applauded for thinking outside the box to put actions in place that will promote growth and investment in India. 

What are these new developments?

On September 20th, the Honourable Finance Minister, Nirmala Sitharaman, has confirmed his plans to get India’s GDP growth rate moving in the right direction:

  • New provision inserted in the income tax act with effect from fiscal year 2019-20, that allows any domestic company to pay income tax at the rate of 22% subject to condition they will not avail any incentive or exemptions. Effective tax rate to be 25.17% inclusive of surcharge & cess.
  • Manufacturing companies set up after October 1, 2019 to get an option to pay 15% tax. Effective tax rate for new manufacturing companies to be 17.01% inclusive of surcharge & cess. Such companies shall not be required to pay Minimum Alternate Tax or MAT (tax on book profits).
  • Listed companies that have announced buyback before July 5, 2019, tax on buyback of shares will not be charged.
  • Higher surcharge will also not apply on capital gains on sale of security including derivatives held by Foreign Portfolio Investors (FPIs).
  • Enhanced surcharge will not apply to capital gains arising on equity sale or equity-oriented funds (liable to Securities Transaction Tax).
  • To provide relief to companies availing of concessions and benefits, a MAT relief by reducing it from 18% to 15%.
  • Scope of CSR 2% spending by companies has been expanded to include government, PSU incubators and public funded education entities, IITs.

Anuj Jayesh Sharedalal shares his thoughts

Anuj, Partner at C.R Sharedalal & Co., shared with us his belief that that new announcements make the government’s plans achievable. Speaking of the team behind the bold moves, he concludes that “the last few days have seen a number of moves by the Finance Ministry to boost investment and support the industry, the latest one being slashing of corporate tax” and continues by explaining how this will encourage investments into capital markets.

View the complete India Tax update white paper HERE.


For more information on this unprecedented move by India’s Finance Minister and details on other investment incentives and opportunities for doing business in India, please contact Anuj Jayesh Sharedalal, Partner at C.R. Sharedalal & Co., at ajs@crsharedalalco.com or visit the firm’s website.

MGI Asia is part of MGI Worldwide, a top 20 ranked international accounting network with some 5,400 independent auditors, accountants and tax experts in over 260 locations around the world.

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