(PTI)
Finance Minister Nirmala Sitharaman on Monday introduced the Taxation Laws (Amendment) Bill, 2019, in the Lok Sabha to replace the Ordinance that was used to slash corporate tax rate to stimulate growth rate in a slowing economy. The Taxation Laws (Amendment) Bill, 2019 will replace the Taxation Laws (Amendment) Ordinance, 2019, promulgated on September 20, 2019, to cut the base corporate tax rate to 22 per cent from 30 per cent. Sitharaman introduced the Bill just before the proceedings in the Lok Sabha were adjourned for the day following opposition uproar over political developments in Maharashtra. Also, the International Financial Services Centres (IFSCs) Authority Bill, 2019, that provides for creation of a unified financial regulator for IFSCs was introduced amid a din over the Maharashtra developments.
Sitharaman had on September 20 announced the lowering of the base corporate tax rate to 22 per cent from 30 per cent for companies that do not seek exemptions, and reduced the rate for some new manufacturing companies to 15 per cent from 25 per cent. Including surcharges and cesses (levies to raise funds for specific purposes), the effective corporate tax rate will drop by nearly 10 percentage points to 25.2 per cent. The corporate tax cut follows other measures by the government to prop up slowing GDP growth adopted since the May general elections. These include efforts to reduce red tape and boost foreign direct investment (FDI), and plans to consolidate the state-owned banks. As Parliament was not in session and there was a need to provide fiscal stimulus to attract investments, generate employment and boost the economy, the President of India, in the exercise of powers under Article 123(1) of the Indian Constitution, had promulgated an Ordinance to make certain amendments to Income Tax Act, 1961.
