There is good news for companies venturing into the manufacturing sector. Actually, the Parliament has approved the Taxation Law Amendment Bill 2019. The bill provides for tax at the reduced rate of 15 percent to companies entering manufacturing sector after October 1, 2019 and commencing production by 2023. However, software development, mining companies and book printing work will not be eligible for the reduced rate of manufacturing sector.
According to Finance Minister Nirmala Sitharaman negative list of computer software development whether it is in any manner or in any media, mining, change in marble block, filling gas in cylinder, printing of books and production of cinematography film Is placed in Companies entering these areas will not get the benefit of reduced tax rate. However, they will have the option to adopt a tax rate of 22 per cent.
The Finance Minister said that companies which do not take any other exemption will be given the benefit of reduced tax rate. Similarly, in the manufacturing sector, it was announced to give tax at the rate of only 15% to new companies coming after October 1. The effective tax rate will go up to 25.2 per cent for companies falling within the range of 22 per cent including cess, surcharge and 17.01 per cent for new manufacturing units.
The Finance Minister said that the reduction in company tax was done to make India a more attractive investment destination. This will attract companies looking for investment possibilities outside the US and China. Sitharaman promised to continue to pursue reforms to promote economic growth. Explain that the rate of economic growth in the July-September quarter of the current financial year has come down to 4.5 percent. This is the low level of the last six years.