Corporate Tax Rate For Domestic & Manufacturing Companies In India

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corporate tax rate

Direct Taxation Highlights

30 Sep,2019


What is direct tax?

Direct tax is a tax where the incidence and impact of taxation fall on the same entity (it is levied on the income or profits of the person who pays it, rather than on goods or services.)

A gist of the benefits that have been announced by Finance Minister in order to boost the economy, have been listed below.

For Existing Domestic Companies

The Corporate tax rate for Domestic Companies, has been reduced from 30% to 22% .

Exemptions/benefits that cannot be availed are listed below:

  • Additional Depreciation on Plant & Machinery

  • Additional Allowance on Scientific Research

  • Section 32AD (investment in P&M in notified backward areas), 32AB (Investment Deposit Account), 35CCC (Expenditure on Agriculture Extension project), 35CCD (Expenditure on Skill Development project)

  • Chapter VI-A Deductions other than Section 80JJAA

  • Without set off of any loss carried forward from any earlier Assessment Year if such loss is attributable to any of the above deductions

  • Option needs to be exercised before filing of return. Once exercised, it cannot be revoked.

  • MAT will not be applicable to such Companies.

For New Manufacturing Companies: 

Rate of Tax will be 15% (excluding surcharge & cess) subject to the below conditions:

  • Company has been set up & registered on or after 1st October, 2019 and commenced manufacturing operations on or before 31st March, 2023.

  • The Company is not formed by splitting up, reconstruction of a business already in existence.

  • The Company does not use any plant & machinery previously used for any purpose.

  • The Company does not use a building previously used as a hotel or a convention center.

  • The exemptions/benefits as listed above for existing Companies should also not be taken by such new Companies.

  • Option needs to be exercised before filing of return. Once exercised, it cannot be revoked.

  • Minimum Alternate Tax will not be applicable for such Companies.


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