The Taxation Law (Amendment) Ordinance, 2019 introduces important fiscal reliefs for domestic companies with an aim to boost the economy and promote investment. Reduction in corporate tax rates, minimum alternate tax and withdrawal of enhanced surcharge for domestic companies are some of the key changes introduced.
The Government has amended the income tax rates applicable to domestic companies through the promulgation of the Taxation Law (Amendment) Ordinance, 2019 (Ordinance) on 20 September 2019. The Ordinance allows existing domestic companies and new domestic manufacturing companies (set up and registered on or after 1 October 2019 and commencing manufacturing on or before 31 March 2023) to opt for concessional tax rates of 22% and 15% respectively with effect from assessment year (AY) 2020-21. The effective tax rate including applicable surcharge and cess for existing domestic companies and new domestic manufacturing companies opting for the concessional rates will be 25.17% and 17.16% respectively. However, this comes with the stipulation that such companies will not avail of specified exemption/incentives. Further, companies opting for concessional tax rates will not be required to pay any Minimum Alternate Tax (MAT).
Additionally, the Ordinance also gives effect to the press release issued by the Central Board of Direct Taxes on 24 August 2019 in respect of withdrawal of enhanced surcharge on tax payable on the transfer of certain assets.
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