Hello Everyone, my name is Rishish and welcome
to this video on Corporate Tax. So as we know, Govt has slashed Corporate Tax
rates to 22% for domestic companies and 15% for new domestic manufacturing companies This is to give
boost to Make in India initiative and there are some other fiscal reliefs as well which
we going to discuss in this video. If you are on first time on the channel, please
subscribe and hit the bell icon for all latest video updates. Before starting lets see what Corporate
Tax means? in case you are not aware. So corporate/company tax is a direct tax imposed by a jurisdiction
on the income or capital of corporations or companies.
Govt may impose such taxes at the national, state or local levels. Now let’s move on further to see what the
new changes are. The first change is that any Domestic company
now required to pay tax at the rate of 22%. So, with the surcharge and cess it would be
25.17%. Earlier this was 30 % and with all calculations it nearly comes up with 34.9%
or 35%. companies are not required to pay MAT (also known as Minimum alternate tax).
This is subject to Condition that companies will not avail any exemptions or incentives.
Second change is for new manufacturing companies which are incorporated on or after
1st Oct 2019 and commencing product on or before 31st March 2023. Tax rates has been
cut down and new rate is 15%. With Surcharge and Cess this would be around 17.01%. Again,
here also companies are not required to pay MAT . This is subject to Condition that companies
will not avail any exemptions or incentives. This is basically done to boost Govt ‘Make
In India’ initiative. Third important change is related with
MAT which is basically kind of advance tax for small companies or start-ups. New tax
rate is 15% which was earlier 18.5%. Companies which do not opt for the concessional tax
regime and avails the tax exemption/incentive will continue to pay tax at the pre-amended
rate. However, these companies can opt for the concessional tax regime after expiry of
their tax exemption period. After the exercise of the option they will be liable to pay tax
at the rate of 22% and option once exercised cannot be subsequently withdrawn.
Fourth important changes which I combined as bunch of small changes
In this first is related with buyback. For companies that have announced buyback
before July 5, 2019, tax on buyback of shares will not be charged. so there is removal of
the additional 20% tax on companies that had announced buyback before July 5, this was
given as part of budget proposal. Higher surcharge will not apply on capital
gains on sale of security including derivatives held by FPIs. foreign portfolio investors
(FPI) will also gain benefit. For capital gains on equity-oriented funds
or equity sale, increased surcharge won’t be applicable.
There is scope of expanding 2% CSR which can also be known as
The two facts which we need to aware that That To bring Ordinance PM used Special
power (under section 12 Cabinet Rules). This is done just before US visit
There is estimated total one forty-five thousand crore rupees revenue loss. However,
few thinks that this will help in economic slow down and gain in many other ways. Let’s move on benefits due to these changes
and impact on Indian domestic companies and economy
This may help companies to clear dues or debt
This will increase investment opportunities. As we saw foreign portfolio investors (FPI)
may gain benefit. There would be increased profits to shareholders.
May increase job opportunities. This may happen if there would be more new companies.
There is gain for new companies or start-up due to less tax rates.
As we know market runs on sentiments. Give chances to reduce recession and boost in mindset.
This will boost in ‘MAKE IN INDIA initiative’ specially in Manufacturing sector
And the last but most important help to reverse economic slowdown Globally. There are few facts that are noticeable
PM used special power, just before US visit, to bring Ordinance under section 12 Cabinet
Rules. This could also be good GK question so remember.
With PM modi latest statement – Come To India, If There’s Any Gap I’ll Act As Bridge.
I think nothing more we should say as this is definitely a boost and done with perfect
planning. As we discussed these all will lead to
Investment/Economy Booster/More Job securities/Minimal recession Risk etc.
There was Boost in Sensex after this news which creates positivity in market/investment So that’s all for this video. IF you find
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for any queries. Thanks for watching!