Surcharge less Taxing
The cut in surcharge for domestic companies will bring
down their overall tax rate by 0.7725%.
Not a major reduction, but welcome relief.
The cut in surcharge, meant to be a temporary
levy, will be phased out once the Direct Taxes
Code kicks in.
Hike in MAT creates a ruckus
For companies under the MAT regime,
the net increase after accounting for the
reduced surcharge will be 2.9355%.
Companies are grumbling, but Mr Mukherjee
says it will promote equity among corporate taxpayers.
No Evasion under garb of Gift
Unlisted companies will have to pay income
tax on shares that they get as gifts.
The measure is meant to counter tax
evasion and prevent money laundering
in the form of gifts. But it could restrict
Indian companies from reorganising their
ownership within a group.
Real Estate gets a breather
Pending housing and real estate projects
can be completed in five years, instead of
four, to claim deduction on profits.
The finance minister is compensating the
real estate sector for a disastrous year.
Research and Deduction
The weighted deduction for most manufacturing
businesses on in-house research & development
spending rises by a third to 200%.
Measure will be an incentive to expand R&D
expenditure and promote innovation.
Blow to Foreign Companies
Non-residents who render services outside
the country will have to pay tax on their fees
in India if these services are used here.
The measure comes with retrospective effect
from 1976-77. It will impact many foreign
companies that have turnkey contracts in India.
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