Finance Minister Nirmala Sitharaman on Monday said the lower rate of 15 percent minimum alternate tax announced as part of the corporation tax rate cuts in September will be applicable from the current financial year.
She made the statement in the Lok Sabha to clarify a typo in the Taxation Laws (Amendment Bill), 2019, which said the reduced MAT will be come into force from the next financial year beginning April 1, 2020.
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The intention, she said, has always been to apply reduced MAT rate from 2019-20.
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"The intention again was always to apply a reduced MAT rate of 15 percent from the year 2019-20. So that correction or the error that has crept in will be now corrected through the official amendment now. So, it applies from 2019-20 the original intent was that. It continues to be so even now," she said.
The Bill, with amendment, was later approved by a voice vote in the Lok Sabha. The Bill replaces an Ordinance which effected the corporate tax reduction.
For companies that continue to avail exemptions or incentives, the MAT has been reduced from 18.5 percent to 15 percent.
MAT is the minimum tax that companies have to pay in case their normal tax liability after claiming deductions falls below a certain limit.
Sitharaman also said the Bill has a specific intention to attract investment in manufacturing. "At moment our specific objective is to draw manufacturing companies from all over the world," she said.
However, the service sector companies would benefit from the concessional tax regime of 22 percent extended to all existing domestic companies, the minister added.
"Further, they may also benefit from the reduced rate of MAT at 15 percent which would be applicable to all companies which do not opt to be taxed at the concessional tax regime," the minister said.
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