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19 December 2019 India passes Amendment Bill approving reduced tax rates for Indian companies On 11 December 2019, the President of India approved the Taxation Laws (Amendment) Bill, 2019 (Amendment Bill) to repeal and replace the Taxation Laws (Amendment) Ordinance, 2019 (Ordinance) passed by the Government in September 20191 which significantly reduced the corporate income tax rate for certain Indian companies. The Ordinance provided for a major reduction in corporate income tax (CIT) rates for existing companies (22%)2 and new manufacturing companies (15%),3 subject to certain conditions. The Ordinance also implemented the withdrawal of the higher surcharge for non-corporate entities on certain capital market transactions,4 and provided an exemption from the share buyback tax for listed Indian companies that publicly announced share buybacks on or before 5 July 2019 but had not completed the share buyback by that date. The Amendment Bill, which has now become an Act (Amendment Act), is largely in line with the Ordinance, with the following key amendments:
As these amendments have the potential to limit the scope of the CIT rate reduction in a significant manner, critical evaluation of the Amendment Act by taxpayers is required. 1. See EY Global Tax Alert, India reduces tax rates for Indian Companies, dated 25 September 2019. Ernst & Young LLP (India)
Ernst & Young LLP (United States), India Tax Desk, New York
Ernst & Young LLP (United States), India Tax Desk, San Jose
Ernst & Young Solutions, India Tax Desk, Singapore
Ernst & Young LLP (United Kingdom), India Tax Desk, London
Ernst & Young LLP (United States), Asia Pacific Business Group, New York
Document ID: 2019-6629 |