New Delhi [India], Nov 20 (ANI): Union Cabinet on Wednesday approved a proposal for introducing the Taxation Laws (Amendment) Bill, 2019, in the ongoing session of Parliament to replace the Ordinance.The Ordinance was promulgated to amend the Income Tax Act, 1961, and The Finance (No 2) Act, 2019 to provide domestic companies with an option to opt to for lower tax rates in September 2019.In the Ordinance, a new provision was inserted in the IT Act to provide that with effect from the current financial year 2019-20, an existing domestic company may opt to pay tax at 22 per cent plus surcharge at 10 per cent and cess at 4 per cent, if it does not claim any incentive or deduction. With the promulgation of the Ordinance, the effective tax rate for these companies came to 25.17 per cent. They would also not be subjected to Minimum Alternate Tax (MAT).In order to attract fresh investment in manufacturing and provide boost to 'Make in India' initiative of the government, another provision was inserted to the IT Act, to provide that a domestic manufacturing company set up on or after October 1, 2019 and which commences manufacturing by March 31, 2023, may opt to pay tax at 15 per cent plus surcharge at 10 per cent and cess at 4 per cent if it does not claim any incentive/deduction."The effective rate of tax comes to 17.16 per cent for these companies. They would also not be subjected to MAT," a PIB release said."A company which does not opt for the concessional tax regime and avails the tax exemption or incentive shall continue to pay tax at the pre-amended rate. However, these companies can opt for the concessional tax regime after the expiry of their tax holiday or exemption period. After the exercise of the option, they shall be liable to pay tax at the rate of 22 per cent. Further, in order to provide relief to companies which continue to avail exemptions or incentive, the rate of MAT was reduced from existing 18.5 per cent to 15 per cent," it said. (ANI)

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