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Corporate Tax Cut
Why is it in the news ?
- The government issued an ordinance to reduce the corporate tax rate for domestic firms and new manufacturing units by 10 to 12 percentage points.
- The cuts effectively brought India’s tax rates on par with its competing Asian peers.
More in the news
- Presently (before the tax cut), Corporate tax for domestic companies with annual turnover less than Rs.400 crore is 25%. Above Rs 400 crore, it is 30%.
- The tax cuts also include reduction in surcharge on corporate income tax from 12% to 10%.
- The rate cuts will make Indian companies more competitive globally, and will encourage foreign companies to invest in India, which could boost private sector investments.
- It will increase corporate savings and therefore, also investment and make Indian firms more competitive.
Corporate social responsibility (CSR)
- Government has decided to allow corporate India to use their mandatory corporate social responsibility (CSR) spending for investments in R&D.
- The fund is expected to be invest in publicly-funded incubators and contribute to research efforts in science, technology, medicine and engineering at major institutions and bodies.
Source
The Hindu.