India Inc. is still seeking clarity from the government after its decision to cut corporate tax rate last week. Finance Minister Nirmala Sitharaman on Friday announced that the government proposed to cut corporate tax rates to 22 percent for domestic companies provided they will not avail exemptions or incentives and 15 percent for new domestic manufacturing enterprises as part of a raft of measures to boost economic growth. It’s estimated that the giant tax cut will lead to corporate profits rising by 30 percent.

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A government official has told CNBC-TV18 that they are collating the issues raised by the industry and clarification is likely soon. The questions raised by the industry revolve mainly around the issue of MAT credits, who qualifies for the 15% flat tax on new manufacturing units, SEZ benefits among others.

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North Block sources have indicated that the government may allow adjustment of basic liability when it comes to MAT credits. It’s also learnt that the government is against availing credit for MAT which has already been paid.

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The 15 percent tax on new manufacturing units has also been an area of confusion. The press release says that the 15 percent tax applies to new manufacturing enterprises set up after October 1, 2019. It also says, “This benefit is available to companies which do not avail any exemption/incentive and commence their production on or before March 31, 2023. The effective tax rate for these companies will be 17.01 percent inclusive of surcharge and cess.”

First Published:Sept 25, 2019 3:53 PM IST