Lok Sabha Question No. 1240 (UNSTARRED), answered on 2019-11-25
Subject: Increase in Corporate Tax
Ministry: FINANCE
Asked by: Dibyendu Adhikari

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 1240

TO BE ANSWERED ON MONDAY 25 TH  NOVEMBER, 2019 AGRAHAYANA 4, 1941 (SAKA)

## INCREASE IN CORPORATE TAX

## 1240. SHRI DIBYENDU ADHIKARI:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is true that India's corporate tax is the lowest among the South East Asian countries;
- (b) if so, the reasons therefor;
- (c) whether the Government has any plans to increase the corporate tax; and
- (d) if so, the details thereof and if not, the reasons therefor?

## ANSWER

## THE MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

- (a) and (b): The corporate tax rate of ASEAN countries are as under:
2.  With regard to the corporate tax rate in India it may be noted that The Taxation Laws (Amendment) Ordinance, 2019 (Ordinance) promulgated on 20.09.2019 amended the Income-tax Act, 1961 (the Act) and the Finance Act to, inter alia, reduce the corporate tax rates such that section 115BAA inserted in the Act read with section 2 of the Finance Act provides that an existing domestic company may pay tax at 22% plus surcharge at 10% and cess at 4%, if it does not claim any incentive, deduction.
3.  Further, section 115BAB has also been inserted in the Act to provide that a domestic company (set up on or after 1 st October, 2019) engaged in manufacturing or production of any article or things and research in  relation  to,  or  distribution  of,  such  article  or  thing  manufactured  or  produced  by  it,  and commencing manufacturing by 31 st March, 2023, may opt to pay tax at 15% plus surcharge at 10% and cess at 4%, if it does not claim any incentive, deduction.
4.   These companies would also not be subjected to Minimum Alternate Tax (MAT). Also, in order to ease the burden of MAT on the companies which continue to avail incentives, section 115JB of the Act has been amended to reduce the existing general rate of MAT from 18.5% plus surcharge and cess to 15% plus surcharge and cess.
5. A comparison of the corporate tax rates of ASEAN countries in the above table with the reduced corporate tax rate in India for new manufacturing companies shows that the corporate tax rate is lower in India than corporate tax rate in most ASEAN countries.

| Country     |   Tax Rate (%) |
|-------------|----------------|
| Philippines |           30   |
| Indonesia   |           25   |
| Myanmar     |           25   |
| Laos        |           24   |
| Malaysia    |           24   |
| Cambodia    |           20   |
| Thailand    |           20   |
| Vietnam     |           20   |
| Brunei      |           18.5 |
| Singapore   |           17   |
| Timor       |           10   |

(c) & (d) There is no such proposal.

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## LOK SABHA

Un-starred Question No: 1240

To be answered on: Monday, November 25, 2019/Agrahayana 4, 1941(Saka)

## Increase in Corporate Tax

| QUESTION                                                                                                                                                                                                               | ANSWER                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1240. SHRI DIBYENDU ADHIKARI: Will the Minister of FINANCE be pleased to state: (a) whether it is true that India's corporate tax is the lowest among the South East Asian countries; (b) if so, the reasons therefor; | (a) and (b): The corporate tax rate of ASEAN countries are as under: Country Tax Rate (%) Philippines 30 Indonesia 25 Myanmar 25 Laos 24 Malaysia 24 Cambodia 20 Thailand 20 Vietnam 20 Brunei 18.5 Singapore 17 Timor 10 2. With regard to the corporate tax rate in India it may be noted that The Taxation Laws (Amendment) Ordinance, 2019 (Ordinance) promulgated on 20.09.2019 amended the Income-tax Act, 1961 (the Act) and the Finance Act to, inter alia, reduce the corporate tax rates such that section 115BAA inserted in the Act read with section 2 of the Finance Act provides that an existing domestic company may pay tax at 22% plus |

|                                                                                                                                              | surcharge at 10% and cess at 4%, if it does not claim any incentive, deduction. 3. Further, section 115BAB has also been inserted in the Act to provide that a domestic company (set up on or after 1 st October, 2019) engaged in manufacturing or production of any article or things and research in relation to, or distribution of, such article or thing manufactured or produced by it, and commencing manufacturing by 31 st March, 2023, may opt to pay tax at 15% plus surcharge at 10% and cess at 4%, if it does not claim any incentive, deduction. 4. These companies would also not be subjected to Minimum Alternate Tax (MAT). Also, in order to ease the burden of MAT on the companies which continue to avail incentives, section 115JB of the Act has been amended to reduce the existing general rate of MAT from 18.5% plus surcharge and cess to 15% plus surcharge and cess. 5. A comparison of the corporate tax rates of ASEAN countries in the above table with the reduced corporate tax rate in India for new manufacturing companies shows that the corporate tax rate is lower in India than corporate tax rate in most ASEAN countries.   |
|----------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c) whether the Government has any plans to increase the corporate tax; and (d) if so, the details thereof and if not, the reasons therefor? | (c) &(d) There is no such proposal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |