To boost the economy, the corporate tax was reduced from 30 percent to 22 percent

S (PTI) Panaji, Ta. ૨૦

The government, which is facing less than six-year august economic growth and a six-year high unemployment rate, has announced that the corporate tax on companies will be reduced by 5 per cent to 5.2. India's corporate tax has risen to the same level as China and South Korea.

Two-and-a-half months after presenting its first budget, Finance Minister Nirmala Sitaram will be charged Rs 1.8 lakh crore on the government's treasury from today's announcement of a reduction in corporate tax.

This is the fourth financial incentive package announced by the government after the budget. At present, companies had a corporate tax of 5 percent, which has now been reduced to 5 percent. Corporate tax for start-up manufacturing companies has been reduced from 1% to 2% after October 1, and before March 7.

However, these new companies will get tax relief only on the condition that they do not get the benefit of any other incentive scheme like any other tax holiday.

Considering the surcharges and cesses imposed on companies, corporate tax will increase from 5% to 5%. Which was presently at 8.5%. If the cess and surcharge is levied on the corporate tax of the new manufacturing unit, the corporate tax rate will rise to 8.5 per cent, which was presently 8.5 per cent.

The new tax rate will be implemented from April 1. With corporate tax rates as high as China and South Korea, India will be able to attract foreign investment.

Companies in China, South Korea and Indonesia have to pay 5 percent tax while Malaysia has a corporate tax of 5 percent. In Japan alone, the corporate tax is 5 percent. Hong Kong has the lowest tax rate of 8.6 percent, while Singapore has a corporate tax rate of 8 percent. In Thailand and Vietnam, there is a corporate tax of 5 percent.

Sitaram said that this step of the government will encourage development and investment. The government has set a target of earning tax revenue of Rs 1.5 lakh crore for the financial year 1-3. The target is to keep the fiscal deficit at 5.4 percent in FY 6-8.

RBI Governor Shaktikanta Das welcomed the government's decision. Taxes on share buybacks of listed companies have also been abolished. The super rich tax will not be charged on capital gains on the sale of equity. The decision has been taken to keep the investment in the capital market intact. On this basis, companies will no longer have to pay the Minimum Alternate Tax (MATE).