Lok Sabha Question No. 156 (UNSTARRED), answered on 2020-09-14
Subject: Issues of Corporate World
Ministry: FINANCE
Asked by: Gopal Chinayya Shetty

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 156

TO BE ANSWERED ON SEPTEMBER 14th, 2020

## ISSUES OF CORPORATE WORLD

- † 156. SHRI GOPAL CHINNAYA SHETTY: Will the Minister of FINANCE be pleased to state: (a) whether  the  concerns  of  the  corporate  world  have  been  addressed  after  the announcements made by the Government in September,2019 for strengthening the economy of the country and if so, the details thereof; (b) whether  the  said  announcements  have  strengthened  their  faith  further  towards  the Government and it is likely to expedite the increase in decling investment in the private sector and if so, the details thereof; (c) whether  some  companies  are  likely  to  cut  down  the  prices  of  the  products  for increasing  the  purchase  thereof  after  tax  savings  and  as  a  result  the  process  of retrenchment  in  companies  is  likely  to  come  to  a  halt  and  pave  the  way  for  new recruitments  and  address  the  slowdown  in  employment  and  the  profit  earning companies are likely to give jobs to more people and if so, the details thereof; and whether new employment opportunities are likely to be created especially in sectors the companies which are already in profit are likely to recruit people immediately after the
- (d) like consumer, retail, industrial manufacturing and construction etc. and said tax rebate and if so the details thereof?

## ANSWER

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

(a)  to  (d)  Yes,  Sir.  In  September  2019,  the Government announced several measures to promote  growth,  investment  and  create  new  employment  opportunities  through  the amendments in the Income-tax Act, 1961 and the Finance Act (No. 2), 2019. The following measures were taken:

- I. reduction in the corporate tax rate from 30% to 22% provided the company did not avail any exemption or incentive.
- II. an  option  to  pay  income-tax  at  the  rate  of  15%  for  the  new  domestic  companies incorporated on or after 1st October 2019 and making a fresh investment, subject to

their  not  availing  any  exemption  or  incentives  and  provided  they  commence production by 31st March 2023.

- III. reduction  in  the  Minimum  Alternate  Tax  from  the  existing  rate  18.5%  to  15%  for existing companies that are availing the exemption/incentives.
- IV. to  stabilize  the  flow  of  funds  into  the  capital  market  it  was  decided  that  enhanced surcharge introduced by the Finance (No.2) Act, 2019 shall not apply to on capital gains arising on sale of equity share in a company or a unit of an equity oriented fund or a unit of a business trust liable for securities transaction tax, in the hands of an individual, Hindu Undivided Family (HUF), Associations of Persons (AOP), Body of Individuals (BOI) and Artificial Judicial Person (AJP).
- V. The enhanced surcharge shall also not apply to capital gains arising on sale of any security including derivatives, in the hands of Foreign Portfolio Investors (FPIs).
- VI. In  order  to  provide  relief  to  listed  companies  which  had  already  made  a  public announcement of buy-back before 5th July 2019, it was provided that tax on buyback of shares in case of such companies shall not be charged.
- VII. The amendments expanded the scope of Corporate Social Responsibility (CSR) of 2 percent spending. The CSR 2% fund can be spent on incubators funded by Central or  State  Government  or  any  agency  or  Public  Sector  Undertaking  and  making contributions to public-funded Universities, IITs, National Laboratories, and Autonomous  Bodies  engaged  in  conducting  research  in  science, technology, engineering and medicine aimed at promoting Sustainable Development Goals.

The  measures  were  taken  to  promote  growth  and  investment,  simplify  the  taxation procedure, boost the 'Make-in-India' initiative of the Government, create new employment opportunities,  make  the  corporate  sector  globally  competitive  and  enable  corporations  to support research and development.

Subsequently,  structural  reforms  were  announced  as  part  of  the  Atmanirbhar  package which, inter alia, includes change in definition of MSMEs, collateral-free automatic loans for businesses including MSMEs, subordinate debt for stressed MSMEs and equity infusion for MSMEs through Fund of Funds.

Further, the Atmanirbhar package also announced the new PSU policy, commercialization of  coal  mining,  higher  FDI  limits  in  defence  and  space  sector,  development  of  industrial land/  land  banks  and  Industrial  Information  System,  revamp  of  Viability  Gap  Funding scheme for social infrastructure and new power tariff policy. The measures taken under the Atmanirbhar package are to bolster growth, investment and create employment opportunities.